5 July 2023
Over the past couple of years, the global economy has experienced one of the most unusual periods in recorded history. The COVID-19 lockdowns resulted in the fastest fall in economic activity ever seen and unleashed an unprecedented level of monetary and fiscal stimulus around the world. But this stimulus overheated economies, with consumer prices increasing at a pace not seen since the 1980s last year.
While major central banks have now responded with the largest and fastest increase in policy interest rates seen in decades, monetary policy works in long and variable lags, and, as Ric Deverell, Macquarie's Chief Economist and Head of Net Zero, explains, the full impact of monetary tightening on the global economy is still yet to be felt.