The Federal Reserve and other central banks have been fighting inflation which surged due to supply chain shortages and an energy crisis due to the COVID-19 pandemic and Russia's invasion of Ukraine. In the light of high inflation and steep increase in central bank interest rate around the globe, US dollar started to gain strength. In a bid to curb high inflation, the global central banks started to lift key benchmark rates.
With central banks ratcheting up their response to a global inflation shock, debate is shifting from when they'll win the war to whether faster rising prices are here to stay in a supply-constrained world.
Fortunately, we believe there are already convincing signs that inflationary pressures are moderating and will continue to do so in 2023, said JP Morgan Asset Management in a recent report.
If inflation does not start to slow, we are looking at an uglier scenario. US inflation surged to as high as 9%, while in India the number was around 6-7%. The world faced a synchronized inflation outbreak as food and energy prices surged in Asia, Europe and US. As a result, the commodity prices started to rise leading to higher crude prices which had a cascading effect on food prices and other products and services.Īmong other repercussions of Russia-Ukraine, global inflation has been a very big one in the aftermath. Even before the world could come out of the impact of the pandemic, Russia attacked Ukraine.
Global central banks had kept a loose monetary policy and dovish stance for two long years since the breakout of coronavirus in 2020 to support growth. Experts fear that if the war worsens or extends for too long that will not go well with global market and Indian stocks, too. The war is ongoing and is nowhere close to be coming to an end. The United States announced new military aid for Ukraine recently and vowed to disrupt Russian ties with Iran, which a British envoy said involved Moscow seeking hundreds of ballistic missiles and offering unprecedented military support in return, reported Reuters.
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