The Second Wave!

“Inflation is the parent of unemployment and the unseen robber of those who have saved”- Margaret Thatcher.

The post-COVID period has been tumultuous for the global economy as a colossal demand shock succeeded the “lockdown” induced supply shocks across the globe, thanks to the enormous fiscal and monetary response to the pandemic. The Russia-Ukraine war and the ensuing sanctions further complicated the “rosy” global economic outlook.

Economists have been perplexed by the “mixed” data emanating from the world’s largest economy, even though the “lingering” variable lags are on the verge of ending. Nonetheless, it’s a no-brainer that the monetary policy acts with a considerable lag. As a result, we have to comprehend the second-order effects of the monetary policy to gauge the health of the economy.

While Europe's position is worst among the developed economies in terms of overall growth and inflation, in the East, the situation has been entirely different, and so has the monetary policy r…