Recalibrating policy priorities

As the global storm rages, emerging markets will have to quickly pivot from addressing the pandemic's scars to focusing on the 'twin deficits' to preserve macroeconomic stability

The global economic community remains singularly focused on the inflation challenge confronting advanced economies, wondering how quickly inflation can be brought down and what the collateral damage to activity and labour markets will be. The fact that central bank credibility in some advanced economies appears undermined — despite Chairman Powell’s express resolve to stay the course at Jackson Hole, for example, markets are still pricing in Fed rate cuts in 2023, thereby impeding monetary transmission down the yield curve — is not helping matters any. But even as these central banks face their biggest challenge in five decades, at least