Super-tight policy is still struggling to control inflation

A return to Hikelandia, where price growth just won’t cool

PIKES PEAK, CO - DECEMBER 31: Team leader and climber Tyler Stuart, center, and Scott Smetana, left, break trail in deep snow as they near the summit of Pikes Peak on the Barr trail during the annual AdAmAn's club annual hike up Pikes Peak on December 31, 2019 on Pikes Peak in the Pike National Forest near Manitou Springs, Colorado. The group makes their annual AdAmAn ascent of Pikes Peak to put on the yearly New Year fireworks display from the summit of the mountain. This is the group's 98th hike up the peak. At right is climber Dave Kosley. (Photo by Helen H. Richardson/MediaNews Group/The Denver Post via Getty Images) — Image: Getty Images

Feb 2nd 2023

In october we examined the fortunes of Hikelandia. In this group of eight countries—Brazil, Chile, Hungary, New Zealand, Norway, Peru, Poland and South Korea—central banks have thrown the kitchen sink at inflation. They started raising interest rates well before America’s Federal Reserve and on average have done so more forcefully, too. Yet we found little evidence that their determination was being rewarded with lower inflation. Hikelandia’s experience raised questions about how quickly monetary policy can control prices. Policymakers at the Fed have been watching closely.

This article appeared in the Finance & economics section of the print edition under the headline “A return to Hikelandia”