Unlike 2022, central banks to diverge if energy shock deepens

Central banks are unlikely to respond in unison to a renewed inflation surge as they did in 2021-22, signaling a divergence in policy responses. Expect uneven rate paths across economies, higher volatility in bond and FX markets, and amplified market sensitivity to energy-driven supply shocks.

Analysis

Central banks are unlikely to respond in unison to a renewed inflation surge as they did in 2021-22, signaling a divergence in policy responses. Expect uneven rate paths across economies, higher volatility in bond and FX markets, and amplified market sensitivity to energy-driven supply shocks.