We heard from three central banks this week: the Reserve Bank of New Zealand (RBNZ), the Bank of Canada (BoC), and the European Central Bank (ECB). The first two hiked by 50 bps, the latter of course kept rates steady. All three warned of the same thing: the risk that people begin to think that the current high level of inflation will last for a long time. They said as follows: RBNZ: The Committee will remain focused on ensuring that current high consumer price inflation does not become embedded into longer-term inflation expectations. BoC: There is an increasing risk that expectations of elevated inflation could ... (full story)