Central bank tightening: what could break?
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The Cycle of the AICS Will Not Trigger Episodes of Significant Financial Instability
Constancio expects the current hiking cycle to end before material financial instability concerns arise. The markets are now foreseen that the peak rates of the Fed and the ECB would be respected around 5% and 3%. In particular in the US, all the signs are now quite visible that inflation is going to decelerate next yearQuite sharply. But deceleration of inflation will happen. This is predicated on the notion, which historically is true, by the way, that supply shocks don't last forever.
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