Optimism is scarce in our mega-threatened world

livemint.com:

how to achieve 2% inflation without causing an economic hard landing—but a trilemma: how to achieve price stability while also avoiding a recession and a financial crisis. Developments since the publication of Megathreats have confirmed that this trilemma is a serious issue.

If central banks continue increasing policy rates to pull inflation down to 2%, a recession and debt distress among highly leveraged private and public borrowers become more likely. But if policymakers blink and give up on their price-stability goal, inflation and inflation expectations could get de-anchored, triggering a wage-price spiral.

So far, central banks have not blinked. But if inflation remains above target—as seems likely, given high wage growth and still-high commodity prices—they eventually may bend to avoid causing an economic downturn and a financial crash.

The fact that they have already paused rate hikes despite too-high core inflation (which excludes volatile food and energy prices) suggests that they may be preparing to accept above-target inflation. To be concluded.