World economy set for weak inflation-plagued recovery, OECD warns

“Obviously they shouldn’t tighten too much to the point that that would have a greater impact on growth than is necessary. So this is a delicate balance for central banks, but we are today saying they will need to maintain restrictive monetary policy until there is evidence that inflation is durably returned to target, and that means core inflation as well as headline inflation.

The OECD said past hikes are increasingly feeding through — particularly in property and financial markets — but that their full effect will only appear later this year and in 2024. Clouding the picture even further, it said there is uncertainty about the strength of that impact, while inflation could yet continue to be more persistent than expected.

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