The “gentle and forgiving path” taken by developed-market central banks to rein in inflation over the past year is likely to prove unsuccessful and trigger the need for more forceful, biblical-type action.That’s the view of economists Bruce Kasman, Joseph Lupton and Michael Hanson of JPMorgan Chase & Co.
JPM,
+1.02%,
who described the response of central bankers in the past year as embodying “a New Testament–style grace” — in terms of keeping the economic expansion going and tolerating a gradual decline in inflation. Rate hikes so far have been “a correction from inappropriately accommodative stances rather than an attempt to smite out the expansion,” they said.
On Monday, investors attempted to recover from weeks of volatility driven by a stream of unexpectedly strong U.S. economic data, pushing up expectations for continued rate hikes by the Federal Reserve. All three major U.S. stock indexes
DJIA,
+0.25%
SPX,
+0.35%
COMP,
+0.66%
were looking to rebound after booking weekly losses, while Treasury yields were mixed after 2- and 10-year rates jumped for a fifth straight week and the ICE U.S. Dollar Index
DXY,
-0.52%
was off 0.4%. Don’t miss: Will recession slam the stock market? Here are 3 ‘landing’ scenarios as Fed keeps up the …