Central banks in Europe on Thursday followed the U.S. Federal Reserve in slowing the pace of interest rate increases, but also offered a similar stark message that financial conditions will continue to tighten even as economic performance deteriorates.
Recent months have offered at least initial confidence that the developed world's shared outbreak of inflation, driven by shocks including the coronavirus pandemic and the war in Ukraine, had peaked and begun to ease.
But it hasn't gone away, and policymakers in Frankfurt, London and Washington, responsible for overseeing a large chunk of the world's economy, now face the difficult task of determining just how much further to tighten monetary policy as recession takes hold in the United Kingdom and the eurozone and threatens the United States next year.