Physicist Niels Bohr (who won a Nobel Prize in 1922) once said that prediction is very difficult, especially if it is about the future. The sentiment was subsequently made famous by other philosophers, from legendary baseball player Yogi Berra to film producer Samuel Goldwyn.
Second-guessing financial policymakers is a perilous task at the best of times. A higher than anticipated fall in UK inflation last week led to calls for a pause in further interest-rate rises by the Bank of England, but finance minister Jeremy Hunt was quick to state that the fight against inflation was far from over.
In the eurozone, S&P Global Ratings chief EMEA economist Sylvain Broyer admits that predicting the peak of the European Central Bank’s rate cycle was difficult after the ECB confirmed that rates would rise to 3% in March.
And in the US, expectations that the Federal Reserve would lower rates at least twice before the end of 2023 disappeared within weeks on the back of strong retail sales figures and a surge in job creation.
