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The Unanchored Central Banker

Demography, Fiscal Instability and the Conflict Facing Central Banks

Written By Manoj Pradhan and Charles Goodhart

Through little fault of their own, central banks face an erosion in their ability to fight inflation single-mindedly. Demographic trends, accelerated by the pandemic and politics, will lead to a sustained and much greater deterioration in the government’s fiscal position, rising real interest rates, and higher inflation that reflects domestic labour market headwinds.