Economist Podcasts Shock and war: global prices rise
Mar 17, 2022
Simon Rabinovich, American economics editor, discusses the economic repercussions of Russia's war, detailing how rising commodity prices challenge central banks. Sophie Petter, Paris bureau chief, analyzes the French election's dynamics as Macron navigates voter sentiments influenced by the conflict. Meanwhile, Matt Kaplan highlights the disruption of critical research at Chernobyl due to ongoing warfare, focusing on the ecological impact and the halt of studies on wildlife resilience. Together, they unravel the complex interplay between war, politics, and economics.
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Central Bankers' Dilemma
- Central bankers face a difficult situation due to the war's impact on inflation and a slowing economy.
- The war increases stagflation risks, with slower growth and higher inflation due to commodity market shocks.
Powell's Optimism
- Fed Chair Jerome Powell expresses optimism about controlling inflation without harming growth.
- A Goldilocks scenario is possible where rates are raised enough to lower inflation without derailing growth.
Economic Playbook
- The current economic situation, while challenging, is not entirely unprecedented, as central banks have experience with oil price shocks and tightening cycles.
- The extreme environment makes it crucial for central banks to tighten monetary policy, as seen in the Federal Reserve and European Central Bank's actions.