Will central banks ultimately fail in their goal of lowering down inflation?

[Abiky]

I think it generally takes something like 18 months for the effects of raising interest rates
to take full effect in the goal of reducing inflation.

It's the boom to bust tactics which works for increasing and reducing inflation. Central
banks are raising interest rates in various increments, when the they cripple a lot of
people and recession takes hold and inflation drops they will start reducing interest rates
to stimulate growth and the cycle starts again.

So no central banks will not fail.

Well there's still the issue of the Russo-Ukraine war and the COVID-19 pandemic. How will central banks control inflation when there are large disruptions in the global supply chain? Not to mention, geopolitical tensions are on the rise. If they want to "fix" the economy, governments need to deal with the aforementioned issues first. Unless the EU becomes energy-independent and the US abandons fossil fuels for good, we won't be going anywhere soon.

There needs to be a collaborative effort from all sides to help beat down inflation for good. While I admit inflation won't disappear completely, it's possible to reduce it to a point where it doesn't affect poor people. The US is aiming for a 2% inflation rate, so we're going to have to see if that will work out in the long run. Maybe 2024 will turn out to be a bright year for the global economy? Just my opinion

[Argoo]

Central banks have taken a hawkish stance against inflation by raising interest rates at a constant rate. Their goal is to reduce the negative effects of both the COVID-19 pandemic and the Russo-Ukraine war on the global economy. While history has shown us that rising interest rates reduces inflation over time, this time is different. There are huge disruptions in the global supply chain and geopolitical tensions are rising at a fast pace. We can't expect inflation to lower down based on rate hikes alone. If the war prolongs to a very long time, I can't imagine how successful central banks will be in trying to tackle inflation for good.

Do you think such financial entities will fail in their goal of lowering down inflation? If not, why? Is there still hope for a global economic recovery when the war and the pandemic are at play? Your input will be greatly appreciated. Thanks.

Inflation is an inevitable companion of the economies of states and it has both positive and negative sides. We see that the global economy is falling, and inflation is growing for objective reasons, including the damage from the coronavirus pandemic and the fight against it, as well as the war between Russia and Ukraine, which led to a violation of the supply chains of petroleum products and agricultural products, and also led to the application of international sanctions, which in any case have a two-way effect.
States will never be able to overcome inflation, because it is also necessary, because it helps in the redistribution of production and human resources.

[Sayeds56]

Lowering the inflation rate and its impact will not fully rely on the central banks decisions. There has to be some tie with the economic factors like asking the OPEC to produce more supply of oil.

That's one of the biggest factor that they have to consider to lower the impact of the inflation. Because when oil increases, everything goes up and it's a major ingredient for an economy to fall and have more expensive goods and services due to high price of oil.

Indeed, it is a biggest factor behind skyrocketing of inflation all over the world but the price of crude oil are more or less stable around $80 which is good news but it should gradual come down to Pres-Ukraine level to see a meaningful impact on inflation. OPEC can play an important role by increasing supply but question arises why they will do it, they are making good profit in the current market situation.

[arallmuus]

Inflation is an inevitable companion of the economies of states and it has both positive and negative sides.

Its not really inevitable though as steps to slow things down or stop inflation from happening completely could have been made before inflation rise but nah we always have to deal with it then banks will put up counter measurement to the inflation after its effect has been 'damaging' atleast so people are totally used to inflation as part of economic cycle by now

[Frankolala]

Central bank can not bring down or reduce inflation because the world economy is been ravaged by two major factors which can bring down the economy of any country. The Covid-19 has done a lot of damage to our economy, the world hasn't even recovered from that damage before the war came in to worsten the whole thing.

For the decline of inflation to be achieved, so many challenges that the world economy is facing should be tackled,there should make way to create peace in the ongoing war by dialogue with both countries involved instead of sponsoring or assisting the continuation of the war. Nobody knows for how long this war will last and it  will do more damage to the world economy and more inflation will be experienced because they are all focused on winning the war and not considering the damage it is doing to the world at large.

[so98nn]

Actually they will be able to do it right because they also did in the past and they have always managed to escalate the situation towards right road. In fact I could not imagine world getting into negative trends for very long terms. It will impact the lives of common peeps like me and it would be hard to sustain a good lifestyle for very long. Obviously every bit of action by government and central banks will impact us so they must recover the world from such down trend. Whether they use high taxes for time being and try to get it in-line or whether they use other ways (like bitcoin) but they should do it.

[redsun114]

Lowering the inflation rate and its impact will not fully rely on the central banks decisions. There has to be some tie with the economic factors like asking the OPEC to produce more supply of oil.

That's one of the biggest factor that they have to consider to lower the impact of the inflation. Because when oil increases, everything goes up and it's a major ingredient for an economy to fall and have more expensive goods and services due to high price of oil.

Many thinks they are the primary cause of it because banks supplies money and more money means more inflation but I think you are right that there would still be other factors that are involved here. Still, banks can help by not producing more money and let the government or the people find some alternative remedies, I am sure there are some available out there.

It seems that the oil is like a btc, because oil also controls the price of other goods while btc is known to control the price of other cryptos. Producing more oil not only helps lowering the effects of the inflation but also the recession because it will force oil companies to hire more people to speed up the process.

[Flexystar]

Currently the only barrier that is standing between world getting crumbled upon itself in terms of economic crisis and doomsday preparation is current Money reserve of every country! Once they start to exhaust and once government is no longer on the possession of real money circulation things gonna go out of hands. For now countries like USA, Europe are trying to show that they are completely fine but they are not. All they are doing is showing us unrealistic values. They don’t have money, they have virtual back ups and bonds and nothing else. If employment is going down then taxes will go down and money circulation will halt even further. Central will have no option but to declare long lasting economic crisis.

[palle11]

Do you think such financial entities will fail in their goal of lowering down inflation? If not, why?

I don't think they will fail and the reason is central banks are not independent of individual government and so their decisions and regulations are government policies. Interest rate is not only what reduces inflation, the government also has role to play like increase productivity and exportation will also help to stabilize the economy, increase GDP. Increase productivity is the direct role of government, production will reduce scarcity,  as a result of this inflation will be reduced.

Is there still hope for a global economic recovery when the war and the pandemic are at play? Your input will be greatly appreciated. Thanks.

There is solution but not to the extent that things will go back to the way they were before the war and covid-19. Before then wheat production was cheaper and it gets across to countries that are in need easily and we understand how oil price have also skyrocketed now, these won't be the same anymore.

[sunsilk]

Lowering the inflation rate and its impact will not fully rely on the central banks decisions. There has to be some tie with the economic factors like asking the OPEC to produce more supply of oil.

That's one of the biggest factor that they have to consider to lower the impact of the inflation. Because when oil increases, everything goes up and it's a major ingredient for an economy to fall and have more expensive goods and services due to high price of oil.

Indeed, it is a biggest factor behind skyrocketing of inflation all over the world but the price of crude oil are more or less stable around $80 which is good news but it should gradual come down to Pres-Ukraine level to see a meaningful impact on inflation. OPEC can play an important role by increasing supply but question arises why they will do it, they are making good profit in the current market situation.

Yeah, it's starting to be stable for now and the effect will gradually come to the economy of all the countries. Those top leaders can pressure them to push for more supply so that the prices will go down and it will be a domino effect.

Well, I don't know much about OPEC but if there's a world elite that holds and controls it, they won't be pressured to any command by a world leader.

Many thinks they are the primary cause of it because banks supplies money and more money means more inflation but I think you are right that there would still be other factors that are involved here. Still, banks can help by not producing more money and let the government or the people find some alternative remedies, I am sure there are some available out there.

Printing of more money during the height of the pandemic is also one factor. It's a consolidation of many factors but having that high price with oil is also one of the major reasons.

Well, as it become stable these days, oligarchs are still pushing for limitation of the supply so that they can still capitalize the situation for the other countries.

It seems that the oil is like a btc, because oil also controls the price of other goods while btc is known to control the price of other cryptos. Producing more oil not only helps lowering the effects of the inflation but also the recession because it will force oil companies to hire more people to speed up the process.

Good comparison, when oil goes up then everything goes up. The same with btc and alts, when btc goes up, most alts are going up too.

[pooya87]

Well there's still the issue of the Russo-Ukraine war and the COVID-19 pandemic. How will central banks control inflation when there are large disruptions in the global supply chain? Not to mention, geopolitical tensions are on the rise.

These things are the catalysts not the reason. The real reason is printing money which is the easiest way incompetent economists use to blow some life in a dying economy. For example if they hadn't printed so much money during the COVID19 pandemic we wouldn't have seen such high inflation rates. Same with these days that they are constantly printing more money in 6 months to a year from now we will see much higher inflation rates not because of whatever conflict will be happening then (like Taiwan-China or continuation of NATO-Russia conflicts) but because of this money printing today.

Unless the EU becomes energy-independent and the US abandons fossil fuels for good, we won't be going anywhere soon.

They are both impossible in our lifetimes. They are too desperate for fossil fuels that they are trying to buy any amount of it from literary anywhere! Just recently US removed some sanctions on Venezuela so that they may be able to buy some oil and oil products!

The US is aiming for a 2% inflation rate, so we're going to have to see if that will work out in the long run.

The problem is that they want to reduce it at ANY COST. This is why they keep increasing interest rate which can only work a little and only to a certain percentage. It has already failed since both inflation and interest rates are high (7-8% vs 4%).
Unless they can decrease oil prices magically to <$40 there is no way to save the economy in near future. Specially when inflation and recession creates a worse crisis than 2008 soon.

[Abiky]

Central bank can not bring down or reduce inflation because the world economy is been ravaged by two major factors which can bring down the economy of any country. The Covid-19 has done a lot of damage to our economy, the world hasn't even recovered from that damage before the war came in to worsten the whole thing.

For the decline of inflation to be achieved, so many challenges that the world economy is facing should be tackled,there should make way to create peace in the ongoing war by dialogue with both countries involved instead of sponsoring or assisting the continuation of the war. Nobody knows for how long this war will last and it  will do more damage to the world economy and more inflation will be experienced because they are all focused on winning the war and not considering the damage it is doing to the world at large.

That's certainly true, mate. Unless COVID-19 and the Russo-Ukraine war go away, we can't expect inflation to ease anytime soon. Governments are going to need to work together to put an end to the war for the good of the economy. I'm wondering if prolonging the war is a plan for governments to go full-speed ahead for a global reset. Effectively, the rich have become richer, while the poor, poorer. Let's see how long will it take for inflation rates to lower down to an acceptable rate. It's a widely unpredictable world we're living into, so we can only hope for the best. Who knows what the future holds for the global economy? Just my thoughts

[Don Pedro Dinero]

What surprised me is that there was not much inflation until a year ago, which is when it started to be noticed, despite the expansionary policy of the central banks. In reality what happened before, like after March 2020, is that inflation went to financial assets rather than consumer goods.

Bringing down inflation in goods and services will depend on a number of things, not least lower energy prices, but even if it is achieved, I do not see central banks reducing their balance sheet indefinitely. As soon as they can, they will start printing again, and hopefully the effect of this will be that the extra money will push up prices of financial assets such as bitcoin, rather than goods and services.

[adaseb]

From what I can see the rising rates has maybe a very small effect. I see that the CPI is much lower than before however everything is still very expensive. Grocery prices still keep going higher and higher.

The nail on the coffin will be if the employment numbers show some slowdown meaning that unemployment has bottomed and will go up. Right now we got a bad labor shortage and it’s causing this inflation to worsen. This week we get the CPI numbers and we will see how they go.

[gantez]

From what I can see the rising rates has maybe a very small effect. I see that the CPI is much lower than before however everything is still very expensive. Grocery prices still keep going higher and higher.

The nail on the coffin will be if the employment numbers show some slowdown meaning that unemployment has bottomed and will go up. Right now we got a bad labor shortage and it’s causing this inflation to worsen. This week we get the CPI numbers and we will see how they go.

We are seeing it clear that unemployment rate is on the increasing side and I still get to wonder how people will be surviving without jobs and government not providing jobs. CPI work with capital and no capital is meaning no investment and no job can be created in all this circle working this way we are still going far in this economic downturn.

[Crypto Legend]

Sometimes the government relies too much on the central bank to overcome inflation, in my opinion this is a mistake, without increased production, inflation will continue to occur, and it is proven that many central banks fail to overcome inflation so as to make the economy chaotic.

[Abiky]

From what I can see the rising rates has maybe a very small effect. I see that the CPI is much lower than before however everything is still very expensive. Grocery prices still keep going higher and higher.

The nail on the coffin will be if the employment numbers show some slowdown meaning that unemployment has bottomed and will go up. Right now we got a bad labor shortage and it’s causing this inflation to worsen. This week we get the CPI numbers and we will see how they go.

Governments are going to need to ramp up production in order to curb down inflation for good. Raising interest rates is not enough to fix the economy, especially when the COVID-19 pandemic and the Russo-Ukraine war are disrupting the global supply chain. Countries are going to need to become self-sufficient by relying on alternative energy sources (nuclear energy?) and ditching oil for good. Once that happens, things could go back to normal. The EU already talked about solving the energy crisis caused by Russia, so it's likely inflation will ease in the region within the long term. I'm yet to see what the US will do with its dependence on oil by OPEC countries.

If everyone worked together, there would be hopes of seeing a brighter future. Let's see if central banks' efforts to tackle inflation will materialize during the course of 2023. Just my thoughts

[pooya87]

Countries are going to need to become self-sufficient by relying on alternative energy sources (nuclear energy?) and ditching oil for good.

It is impossible to ditch fossil fuels for good because energy is not their own usage. From your mouse and keyboard that are made from oil products to fertilizers that use gas and gas products need fossil fuels.

As for nuclear energy, the problem is that the technology is in the hands of a small number of countries, and they have to build nuclear facilities for 90% of the world (they will not allow you to have the technology at any cost either). On top of that the nuclear fuel is also in the hands of a small number of countries (like Russia!) which means switching to nuclear energy comes with the same dependence as fossil fuels.

[Abiky]

It is impossible to ditch fossil fuels for good because energy is not their own usage. From your mouse and keyboard that are made from oil products to fertilizers that use gas and gas products need fossil fuels.

As for nuclear energy, the problem is that the technology is in the hands of a small number of countries, and they have to build nuclear facilities for 90% of the world (they will not allow you to have the technology at any cost either). On top of that the nuclear fuel is also in the hands of a small number of countries (like Russia!) which means switching to nuclear energy comes with the same dependence as fossil fuels.

Well that sucks. If that is the case, governments would be "deadlocked" in their efforts to help restore the economy back to its former glory. Unless the war between Russia and Ukraine ends, I don't think things will improve anytime soon. Sooner or later, this will be all over as wars don't last forever. We're yet to see whenever the pandemic will disappear in the distant future or be with us forever. Everything will depend on governments' collaborative efforts to help put an end to all of this mess for good.

I just hope world countries don't end up like Venezuela with a hyperinflation that makes it impossible for poor people to acquire life necessities. It will be complete chaos if this happens, greatly establishing a fine line between the wealthy and the poor. The future is widely uncertain right now, so we can only hope for the best. Just my thoughts

[Sayeds56]

Sometimes the government relies too much on the central bank to overcome inflation, in my opinion this is a mistake, without increased production, inflation will continue to occur, and it is proven that many central banks fail to overcome inflation so as to make the economy chaotic.

The governments all over the world rely on central banks to control inflation which is constitutional role of the bank in many countries and government can't interfere in it. Central banks usually control it by money tightening or softening policy which usually works but you are also right that that governments on their part should play their role by increasing agricultural (food price is an important component of inflation calculation) & industrial product which can equally work to bring down inflation.