Making sense of the markets this week: January 22, 2023 Jan 20th

Are central banks smarter than we thought—or are they just lucky?

The world’s central banks faced plenty of criticism over the last 12 months, with skyrocketing inflation data dominating the headlines. Market watchers might not-so-fondly remember the whole “transitory” debate.  

Here’s a potentially unpopular take on things: Central bankers may have got it right more often than they got it wrong. The pain of quick interest rate increases has caused people to forget the desperation of early 2020, when faith in the economy (and our ability to collectively stay alive) was plummeting. Central bankers around the world threw everything (plus the kitchen sink) at the anemic pandemic economy. And they successfully prevented a Great Depression-type of spiral. If its cost turns out to be getting a little behind the inflation curve—before successfully catching back up in a year or two—that price is pretty low, historically speaking…