Central banks for the world's biggest economies have served notice that they will keep interest rates as high as needed to tame inflation, even as two years of unprecedented global policy tightening reaches a peak.
Despite gradually cooling, inflation in most large economies remains well above the target 2% level which central bankers deem healthy. In August it stood at 3.7% in the United States and 5.2% in the euro zone.
"By this time next year, we anticipate that 21 out of the world's 30 major central banks will be cutting interest rates," Capital Economics wrote in a commentary entitled "A tipping point for global monetary policy". With the United States and Europe both seen avoiding the outright recession once predicted, the enticing view of a "soft landing" for the global economy is coming back into sight, largely thanks to unusually buoyant labour markets.
That unsolved puzzle means opinions are divided as to what the real underlying strength of the global economy is, and whether it can take a sustained period of high interest rates without overall demand being badly damaged.