EIU - Global Monetary Policy 2023

EIU's Global Monetary Policy 2023 report highlights that rising inflation has led to the Federal Reserve and the European Central Bank engaging in significant monetary tightening cycles, raising interest rates aggressively. The US has seen particularly high inflation rates, reaching a 40-year high of 9% in June 2022, leading the Fed to raise interest rates rapidly from May. Meanwhile, rising inflation has hit the euro zone at a record high of 10.7% YoY in October, driven by Russian gas supply cuts and the impact of war in Ukraine. Both central banks are expected to continue raising interest rates, settling at peak levels by mid-2023, with implications for GDP growth, exchange rates, and economic risks. While inflation is expected to ease in 2023, interest rates are likely to remain high until at least mid-2024. Although the Fed and ECB are expected to manage inflation without a significant recession, the report warns of high risks.