Addressing inflation is greater than the ability of central banks

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It may be rare for experts in the financial and business sectors, as well as economic analysts worldwide, to agree that the monetary policy pursued by central banks in large economies will not be able to address the inflation file. The reasons for this are a mixture of economics. and politics, and perhaps the US Federal Reserve, which is the most reliable institution in America, is a good example of the impression that prevailed on the ability of central banks to deal with inflation, as it was wrongly calculated that this increase in consumer prices temporarily or temporarily, while a few months later he was forced to say It is not temporary, but will remain for a long time, which raises doubts about the credibility of the Bank and its Board of Directors and their ability to play the appropriate role with time and tools to combat inflation in America, the largest world economy, as its rate reached 8.6 percent as the highest rate in four decades.

The world is going through a phase of rising prices that he has not experienced for decades and coincides with the remnants of the repercussions of a major health and economic crisis caused by the Corona virus, which continues as a pandemic is classified. As for the big injection. money in most countries, amounting to about $ 30 billion, which ranged from direct stimulus packages for facilities or individuals, financing and quantitative easing with a reduction in interest rates to near-zero levels, which was reflected in a large increase in the prices of assets and commodities without exception, and what happened is also an extension of the resulting effect.Also about the same policies that were taken in the global financial crisis in 2008. In terms of the supply chains the world is struggling with, it can be seen as an unprecedented crisis that has pushed shipping costs up to levels with which companies have eroded profits despite raising prices. In addition to the aftermath of the Corona pandemic, Ukrainian war that has fueled wheat and grain prices since the beginning of the year to exceed price increases of 37 percent for wheat and 20 percent as an average for grain. The two countries are among the largest exporters of these commodities, accounting for 30% of the volume of exports worldwide It is likely that prices will remain high due to this war for a long time, in addition to their impact on rising energy and mineral prices Because Russia is considered one of the largest producers and exporters of these These reasons are considered In addition to the ability of central banks to limit it, the drying up of liquidity and raising interest rates may only be preferred to put the economies of those countries in stagnation to address inflation, while the impact of rising prices of poor production or the Russo-Ukrainian war will remain permanent unless these files are resolved, which is why the US Federal Reserve raised interest rates a few days ago. Few with a half percentage point did not surprise the markets, and economists in America did not see it as a step capable of halting inflation, or as a strong brake on stopping inflation. Therefore, after the US market indices rose at high rates, they returned for several reasons to decline to wipe out their profits, the most important of which is the rapid return to expectations that the US Federal Reserve will be forced to cut interest rates by three-quarters increased by one point at a time in the next meeting after about a month, although Bank President Jerome Powell hinted to increase By a quarter point, but the confusion with the Bank Board’s estimates at the end of last year about his view of inflation, which has changed from a temporary rise to a long-term rise, has shaken the Fed’s credibility. Important in global production, such as China, over its strict measures to confront the Corona virus. factors are the actual treatment for the problem of inflation. In addition, it is added to the re-promotion of international trade and economic cooperation to facilitate the movement of trade and investment worldwide, and the need to change the policies of some Western countries towards the investment trend to increase oil and gas production capacity . , and return Taking into account their energy mix ratios, and some policies that Hafeez, taken, affected the productivity of those countries, such as subsidizing families in America with amounts that prevented the heads of those families from returning to work. as long as these subsidies were not spent, which reduced the labor force and increased wages, which is also happening in some European countries This is what they are experiencing from the rise in consumer prices and the disruption of unloading ships, whose waiting at their ports lasts for four weeks , which reduces supply and increases prices.

The big central banks, not in America or Europe, will not be able to handle the inclusion. The solutions are available to the governments of their countries, in addition to the need to address the inflamed political files. Its continuation will extend the scope of their negative impact and make inflation uncontrollable and difficult to control, and most countries of the world will enter into an inflationary stagnation from which it will not be easy or in a short period of time and can expand. It has widespread chaos in the war between Moscow and Kiev, leading to a third world war whose main theater is Europe.

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