Today's inflationary surge is being felt not just by the advanced economies but also by the majority of emerging markets and developing economies.

From the pandemic and geopolitical tensions to broader macroeconomic developments, new obstacles to "normality" seem to be cropping up everywhere.

It is not difficult to fathom why the United States’ central bank is especially resistant to any quantum change in the existing financial system.

The longstanding negative correlation between stock and bond prices is an artifact of the low-inflation environment of the past 30 years.

Much like the US Federal Reserve, the International Monetary Fund has subtly expanded its own remit even as it has failed to adjust to changing economic circumstances. And, as with the Fed, higher inflation could deliver a blow to the IMF's reputation – and to the economies the Fund is meant to help.

Although major economies and markets fared well in 2021 despite all of the uncertainties surrounding new variants of the coronavirus, 2022 will bring new challenges. In addition to central banks shifting toward policy normalization, geopolitical and systemic risks are multiplying.

The later the US Federal Reserve is in reacting properly to inflationary developments, the greater the likelihood that it will have to hit the policy brakes hard, causing market turmoil and unnecessary economic pain. The Fed must now do two things quickly.

To reappoint US Federal Reserve Chair Jerome Powell, President Joe Biden had to resist strong pressure from the left wing of his party for a shakeup. By choosing continuity, Biden accomplished several things at once.

With its poor track record of managing EU funds, Italy’s recovery plan will be a major test for the future of EU policymaking more generally. While it is widely agreed that Prime Minister Mario Draghi must remain on the scene to oversee the plan’s implementation, in what capacity would he be most useful?

Some respected economists are talking as if the US economy is in serious inflationary trouble. But the current uptick in price growth is highly likely to be a largely benign consequence of the post-pandemic recovery.

When forecasts are not specific enough to be actionable, the supply response cannot adjust in a timely or efficient manner. And because there is relatively little slack built into global supply chains, large deviations from normal patterns produce delayed responses, shortages, backlogs, and bottlenecks, like those today.

Locked in a low-growth trap, South Africa's fiscal and macroeconomic situation is unsustainable, not only economically but also politically. To salvage the country's democratic project, the government must offer a credible, comprehensive economic reform strategy.

Limiting global warming to 1.5º Celsius remains just about attainable, but the path to this target is formidable. The United Nations climate summit now underway in Glasgow will indicate whether political efforts to achieve this goal are likely to heat up as fast as scientists tell us the planet is.

While all politicians exaggerate, US President Joe Biden’s claim that his proposed $3.5 trillion spending package “costs zero dollars” rises to a higher plane, and Americans aren’t buying it. Even if the legislation was fully covered by tax increases, the costs for the economy would be significant.

Even at currently elevated US home-price levels, buying still makes sense for those who are set on ownership. But buyers need to be sure that they can accept what could be a rather bumpy and disappointing long-term path for home values.

Policymakers should not have been caught off guard by surging prices and shortages of goods and labor. Practically the entire post-pandemic agenda is built around policies that stoke demand and discourage work, making supply-side constraints entirely predictable.

As price increases accelerate, policymakers at leading central banks are slowly starting to move away from the narrative of “transitory” inflation that has already cost them the policy initiative. But the needed pivot is far from complete and not nearly quick enough, particularly at the US Federal Reserve.

The Chinese government may yet succeed in insulating the broader market from the financial crisis at real estate giant Evergrande. But the larger challenge is to rebalance an economy that has depended for far too long on the bloated housing market for jobs and growth.

The new dual thrust of Chinese policy – redistribution plus re-regulation – will subdue the entrepreneurial activity that has been so important in powering China’s dynamic private sector. Without animal spirits, the case for indigenous innovation is in tatters.

Rising inflation and declining growth are more likely to be a part of the global economy’s upcoming journey than features of its destination. But how policymakers navigate this journey will have major implications for longer-term economic well-being, social cohesion, and financial stability.

Given today’s high debt ratios, supply-side risks, and ultra-loose monetary and fiscal policies, the rosy scenario that is currently priced into financial markets may turn out to be a pipe dream. Over the medium term, a variety of persistent negative supply shocks could turn today’s mild stagflation into a severe case.

Generally speaking, inflation can be stabilized with little recession if people believe the necessary policy tightening will be seen through, rather than abandoned at the first signs of pain. Unfortunately, US economic authorities have done little to inspire such confidence.

The progressive climate agenda in the United States has blinders on when it comes to the global nature of the carbon problem, and the imperative of finding ways to secure the buy-in of emerging-market and developing economies, which are by far the main source of carbon-emission growth.

Many economists seem to view inflation as a purely technocratic problem, and most central bankers would like to believe that.

There is a growing consensus that the US economy’s inflationary pressures and growth challenges are attributable largely to temporary supply bottlenecks that will be alleviated in due course.

The view that central-bank interest-rate policy can and should be the main driving force behind greater income equality is stupefyingly naive, no matter how often it is stated.

Within the space of just half a year, US President Joe Biden has completed a necessary economic-policy regime shift that started chaotically under his predecessor.

By siding with major food corporations over six Malian former child slaves who were seeking compensation under US tort laws, the US Supreme Court has sent a dangerous message.

As the global economy emerges from the COVID-19 shock, systemically important central banks are faced with the unenviable task of deciding when and how quickly to phase out extraordinary stimulus measures.

Most of Latin America is still far from the horrific conditions prevailing in Venezuela, where output has fallen by a staggering 75% since 2013.

Years of ultra-loose fiscal and monetary policies have put the global economy on track for a slow-motion train wreck in the coming years. When the crash comes, the stagflation of the 1970s will be combined with the spiraling debt crises of the post-2008 era, leaving major central banks in an impossible position.

Given recent history, policymakers would be unwise merely to hope for a best-case scenario in which a strong and quick economic recovery redeems the enormous run-up in debt, leverage, and asset valuations.

Far from signaling the return of significant inflation, temporary price increases are exactly what one would expect in a recovery following an economic shutdown.

Although prominent cryptocurrency advocates are politically connected and have democratized their base, regulators simply cannot sit on their hands forever.

Trust is a precious commodity.

While some major economies are recovering fast from the pandemic-induced recession, others are languishing, and still others remain in a state of acute crisis.

Addressing within-country inequality may be the political imperative of the moment.

The post-pandemic economy could well be defined by the return of robust aggregate productivity growth after 15 years of relative sclerosis.

There were three seemingly strong reasons to predict last year that the US economy was headed for a double-dip recession.

Lost in the debate over whether today's ultra-loose fiscal and monetary policies will trigger painful inflation is the broader risk posed by potential negative supply shocks.

Although tough trade-offs are sometimes unavoidable, there is a way for policymakers to maintain a robust global economic recovery in 2021 and beyond while simultaneously pulling up disadvantaged countries, groups, and regions. But it will require both national and international policy adaptations.

Today, it seems to be an article of faith among US policymakers and many economists that the world’s appetite for dollar debt is virtually insatiable.

Recent macroeconomic figures and the accelerating pace of COVID-19 vaccination suggest that optimism about the US economy's prospects is justified. But to avoid snatching defeat from the jaws of victory, policymakers must press ahead with measures to lock in robust, sustainable, and inclusive long-term growth.

With equity markets reaching new heights at a time of rising income and wealth inequality, it should be obvious that today's market mania will end in tears, reproducing the economic injustices of the 2008 crash.

In the near term, markets should not be too worried about a possible spike in demand driving up inflation and interest rates, causing asset prices to fall across the board. But longer-term inflation risks are skewed much more to the upside than many investors and policymakers seem to realize.

Rather than worrying about the prospects of higher long-term expected inflation, the US Federal Reserve is exuding confidence that it can maintain price stability should the need ever arise. It should think again, before the inflation genie has escaped from the bottle.

Before his death on February 6, George P. Shultz, a former US Secretary of the Treasury and Secretary of State, co-authored a final commentary warning of the dangers posed by the vast increase in US government spending in recent years, including during the COVID-19 crisis.

Minimizing the risk of yet more destabilizing COVID-19 variants is crucial if countries are to turn the corner on a shock that has wrecked lives and livelihoods. The alternative is to adopt a bunker-like approach and sharply curtail the inward and outward flow of citizens, residents, and visitors.

Economic forecasting models have long been notoriously inaccurate in predicting inflation, and COVID-19 has further complicated the challenge. Those who heed current consensus forecasts of persistently low price growth could be in for a rude awakening.

Heightened global economic risks mean that many poorer countries could take years to return to their pre-pandemic growth trajectories. And if higher inflation leads the US Federal Reserve to raise rates somewhat sooner than it currently plans, emerging markets will be hit particularly hard.