Central Banks in the United States and Europe are taking steps to address the problem of worldwide inflation in prices. The European Central Bank announced on Thursday that: “In the first quarter of 2022, the Governing Council expects to conduct net asset purchases under the PEPP at a lower pace than in the previous quarter. It will discontinue net asset purchases under the PEPP at the end of March 2022.” The Bank of England announced that they were increasing interest rates from an historic low of 0.1% to 0.25%. The United States Federal Reserve has aggressively dialed back it’s bond buying (quantitative easing) efforts, while predicting three interest rates hikes of 0.25% each in 2022.

The moves are in response to worldwide backlash over rising inflation in the world’s developed economies. As the United States and Europe started emerging from Covid shutdowns over the summer of 2021, a rapid increase in consumer spending helped to drive up costs for many consumer goods. Now many countries are seeing a populist backlash, as working class people ask why there is still “welfare for the wealthy”, in the form of on-going bond-buying and record low interest rates, while average working class people are suffering from increasing costs for housing, food and energy. Republican Party leaders in the United States have made it clear that they are very eager to talk about inflation, and any politician who fails to take concrete action to address the issue faces a very high likelihood of seeing their party suffer serious losses in upcoming election cycles.