Policy in a time of conflict: Central banks and the growth-inflation trade-off

The Weekly Briefing from Capital Economics · Mar 20, 2026 · 26m

Pity the poor central banker. As energy prices surge, they are grappling with the trade-off between growth and inflation, while trying to communicate this all to markets without triggering an unwanted tightening in financial conditions.

At the end of an unusually busy week for policy meetings, Group Chief Economist Neil Shearing and Chief Global Economist Jennifer McKeown assess how central banks are managing this difficult task, and whether investors are right to position for rate hikes from some banks that only a few weeks ago were expected to ease policy this year.

In the latest episode of…