Central bankers stand accused of reacting too slowly to signs that the inflation crisis is dissipating, less than two years after they were criticised for being late in responding to the most brutal surge in prices for a generation.
Some policymakers are already warning that by waiting too long to cut borrowing costs, central banks could harm weakening economies — the eurozone has stagnated all year — or hobble heavily indebted governments such as Italy.
The European Central Bank was thrust into the forefront of this debate this week after eurozone inflation fell to 2.4 per cent, its lowest level since July 2021, taking price growth tantalisingly close to the bank’s 2 per cent target. Similar debates are brewing in the US and UK, even if headline inflation rates there have not yet fallen as low.