Central Banks Continue Their Expensive Experiment In Making Life Affordable

Financial markets remain concerned about persistent inflation, high borrowing costs and the next moves of the central banks. The yield on ten year US Treasury bonds stood at 5.09 percent on 16 October, after climbing above 5 percent in September to its highest level since 2007, as investors weighed government debt, an oil price pushed up by the war with Iran and the chance of yet another Federal Reserve rate rise. A thirty year American mortgage costs around 7.4 percent.

Higher rates feed through into mortgages, business loans and public borrowing, while households in rich economies are still adjusting to years of accumulated price increases. Even where inflation has slowed, everyday necessities cost far more than they did before the recent surge. Central bankers continue to explain that monetary policy works with a delay, which is reassuring provided one's mortgage lender, landlord and supermarket are equally patient.

The distinction between falling inflation and falling prices remains particularly popular among economists, who are technically correct that the two differ and remarkably unsuccessful at making that comforting. Governments point to improving indicators, financial institutions discuss expectations, and ordinary consumers keep performing the increasingly complicated calculation of whether their income will survive until the end of the month.