Tightening the monetary screw
This week, the rate hike cycle definitively kicked off, with many central banks following the Fed’s lead (India, BoE, Czech Republic, Poland, Brazil, etc.). This tightening cycle was widely expected. The unknowns are now of two types: the pace of the hikes and the final level. The Fed partly answered the first question, signalling more 50bp hikes. Nevertheless, whatever the expectations of markets and forecasters, the extremely uncertain and fragile situation calls for caution.