Gradualism has given way to super-sized interest rate increases and a clearer resolve to restrain actual and expected inflation, despite adverse economic consequences. The more hawkish rhetoric and policy actions have unsettled financial markets, driving up term yields and risk spreads. In turn, equity prices have fallen in an environment of weak corporate earnings and rising interest (discount) rates. Meanwhile, the US dollar's exchange value has soared in response to rising US bond yields and investor flight to safety; this is adding to inflation and financial stresses in emerging and developing countries. With ... (full story)