Central banks should be cautious in calibrating a response to inflation | Larry Elliott

They have the chance to be the hero of the hour, but if they get it wrong, we'll be back in recession

Central banks are getting twitchy about inflation. Cost of living pressures are rising just about everywhere and the relaxed mood of last autumn has been replaced by an urgency that could soon become panic.

In the US, where inflation is at its highest in four decades, the latest chatter on Wall Street is that the Federal Reserve will take every opportunity to raise interest rates between now and the end of the year, seven times in all.