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Central banks are about to get a lot more aggressive in their battles to tame inflation – without inducing a recession. Economists call it a soft landing. Can they succeed?
The Reserve Bank of Australia kicked things off yesterday by announcing a 0.25 percentage point increase in its cash interest rate, the first hike in a decade, as data showed inflation was climbing faster than expected.
The U.S. Federal Reserve is on deck today with an expected half-point increase in its target lending rate. That would be the biggest hike in 22 years – and some observers suggest the Fed could raise even more aggressively as it tries to slow the fastest inflation in 40 years.
The Bank of England bats tomorrow, when it’s expected to lift rates a quarter-point to the highest level in 13 years. Inflation in the U.K. is running at a slightly slower pace than in the U.S. but is still at a 30-year high.
But raising rates purposely has the effect of slowing economic growth. The concern is that if a central bank increases borrowing costs enough to slow inflation, it will send its economy crashing into recession.
To examine the risks of that happening now, Alex Domash and Lawrence Summers of the Harvard Kennedy School analyzed U.S. economic data going back to the 1950s to examine links among recession, unemployment and inflation. Their conclusion: It’s already too late.
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Bryan Keogh
Senior Editor, Economy + Business, The Conversation US
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Alex Domash, Harvard Kennedy School; Lawrence H. Summers, Harvard Kennedy School
The Federal Reserve is expected to lift interest rates a half point at its next meeting and more in the coming months, but it may be too late to forestall an economic downturn.
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Quote of the week 💬
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"When Pope John Paul II dubbed Fiji 'the way the world should be' in 1986, he coined a tourist slogan that would last for years. But it hid some of the harsher realities of the country, including the ethnic and political fractures that led to a succession of coups.”
– Apisalome Movono, Senior Lecturer in Development Studies, and Regina Scheyvens, Professor of Development Studies, Massey University, from their story Fiji is officially ‘open for happiness’ – will that apply to its tourism workers too?
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Business
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Steven Kreft, Indiana University; Elham Mafi-Kreft, Indiana University
Two scholars of corporate do-goodery suggest a hidden driver of corporate decisions to leave Russia is the global trend in which record numbers of workers are quitting their jobs.
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Trish Ruebottom, McMaster University; Madeline Toubiana, L’Université d’Ottawa/University of Ottawa; Maxim Voronov, York University, Canada; Sean Buchanan, University of Manitoba
Voyeurism provides a glimpse into the private life of another person to give audiences a revealing and entertaining experience.
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Jessica Vredenburg, Auckland University of Technology; Katharine Howie, The University of Southern Mississippi; Rhiannon M. Mesler, University of Lethbridge
Companies are increasingly taking a stand on social and political issues, but they risk alienating customers in the process. Are other brands learning how to benefit from the backlash?
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Economy
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Sylvia Croese, University of the Witwatersrand; Philip Harrison, University of the Witwatersrand
Master planning has served the entwining interests and ambitions of international as well as local actors in Africa.
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Workers
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Carlos Carrillo-Tudela, University of Essex; Alex Clymo, University of Essex; David Zentler-Munro, University of Essex
300,000 more workers in this age group in UK are now economically inactive, pointing to a major challenge for the government.
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Apisalome Movono, Massey University; Regina Scheyvens, Massey University
Despite losing jobs, many Fijians in tourism-dependent areas reported greater well-being during the pandemic. As tourists return, what are the lessons?
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