“We are navigating by the stars under cloudy skies.” That was how Jerome Powell, Chairman of the U.S. Federal Reserve, recently described the central bank’s task of taming inflation. We can’t think of a more accurate way to describe the central bank’s job, but those words don’t exactly instill confidence in the single most important organization responsible for steering the largest economy in the world.

It’s been more than three years since the pandemic began, and thankfully the worst is behind us, but the global economy is still dealing with the ramifications of COVID. Debates remain on whether a recession is upon us or not and how deep it could be, while economic data continues to be mostly positive. Last quarter, we wrote about one of the negative implications of the fast tightening of monetary policies by the Fed which contributed to the failure of a few banks which were especially vulnerable. This created some social and market anxiety about the safety of deposits and potential systemic contagion, that have now stabilized, as we thought they might.