The central banks that accurately anticipated the post-inflation wave, or perhaps didn’t underestimate its magnitude, were those in commodity-intensive emerging markets. They promptly felt the impact of rising prices on their domestic products.

We had also predicted that these same emerging markets would be the first to identify the subsequent disinflation wave we’ve observed in 2023. Despite the myriad of PhDs at the Fed, they somehow overlooked the signs in 2021 and maintained a loose monetary policy.

To give the Fed some credit, markets were largely asleep at the wheel too until 2022…

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