For anyone trying to understand where interest rates and inflation are heading, it has been a strenuous few days. Jay Powell, chairman of US central bank the Federal Reserve, warned senators he may have to do more to fight inflation than expected, indicating the prospect of interest rates rising more sharply again. Similarly Christine Lagarde, his counterpart at the European Central Bank (ECB), has said that the eurozone is far from ready to declare victory over inflation.
But just as borrowing costs look set for uncomfortable new highs, there were signs of further complications in the form of a nasty sell-off of US banking stocks amid fears that rising interest rates are damaging their balance sheets. This then dragged down markets in Europe and Asia.
So where are we likely to be heading from here?
