Central banks more concerned about inflation than Omicron

Posted on Dec 19, 2019 2021 at 18:13Updated Dec 19. 2021 at 18:22

The hand of central bankers did not shake last week. The uncertainties surrounding the Omicron variant, and its rapid expansion, could have prompted them to postpone major decisions. It has not happened.

The Bank of England, arguably the furthest along in tightening monetary policy, surprised by raising rates for the first time since the pandemic. The US Federal Reserve has also toughened its tone, with the announced doubling of its “tapering” (reduction in asset purchases) and more aggressive expectations of rate hikes (three in 2022, three in 2023 and two in 2024). As for the European Central Bank, which remains the most accommodating of the three, it has also taken a sharp turn, confirming the end in March of its purchasing program linked to the pandemic with a slightly smaller increase than expected in the ‘APP, its “classic” quantitative program, to compensate for it.

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