Top Fed officials, eager to tackle the latest inflation, say they are continuing to raise interest rates, even in the euro zone, where Ukraine's invasion has fueled fears of a slowdown in economic growth. The European Central Bank (ECB) is accelerating its hawkishness.


Ironically, there is growing concern about economic overkill as monetary policy is over-tightened. Attention has focused on the difficulty of quelling inflation (a so-called soft landing) without causing a recession.


Both the U.S. and European Central Banks maintained their stance on a successful soft landing, but as the pace of rate hikes progressed, Oxford Economics faced the risk of excessive rate hikes, increasing significantly with each rate hike.



The main reason for the difficult soft landing is that the impact of monetary tightening on the economy and prices cannot be known until more than half a year in advance. Although not sure which route it is and how big the impact is, if you notice it, it is likely to tighten too much, and even if you rush to cut interest rates, you will lose it sooner or later.


Worryingly, uncertainty about the effects of tightening is a move by banks to tighten corporate credit standards from a global perspective.