Since the start of Russia’s invasion of Ukraine, China has played a decisive – albeit publicly discreet – role in strategic decision-making in Washington and Moscow. As I report for the first time in my new book Overreach, it was an indirect intervention approved by Beijing that pushed the United States to sabotage a deal for the Poles to supply Soviet-made MiG-29 jets to the Ukrainian Air Force in March. And since September, a flurry of Chinese Foreign Minister Wang Yi’s personal diplomacy with NATO and the United States has led to a rare moment of public agreement on Russia, when Xi Jinping said the world “must prevent a nuclear crisis on the Eurasian continent”. during a meeting with Joe Biden at the G20 summit in Bali.

Throughout the war, China’s true position on the Russian-Ukrainian conflict has been difficult to pin down, not least because Beijing has told both sides what they want to hear. In March, Wang appeared to implicitly accuse the United States of “stirring up tensions” and “sowing discord” with Russia. Last month, he told his Russian counterpart, Sergei Lavrov, that “China will also firmly support the Russian side, under the leadership of President Putin, to unite and lead the Russian people,” according to state broadcaster CCTV. Wang also promised that “China is willing to deepen contacts with the Russian side at all levels.” However, in September, on the sidelines of the United Nations General Assembly, Wang told NATO Secretary General Jens Stoltenberg that China “remains open to dialogue and exchanges with NATO and is willing to promote jointly the sound and steady development of bilateral relations…in a spirit of honesty and mutual respect”.

So which side is Beijing really on? The reality is that China has always supported only one side – its own. But the illusion of Chinese support was one of many miscalculations that led Vladimir Putin down the path to war. At a summit in Beijing on Feb. 4 this year, Xi and Putin announced “boundless friendship” without “no-go zones” for cooperation. The two leaders said the new level of Sino-Russian strategic partnership was “superior” to Cold War-era alliances. Beijing was aware of Russia’s plans for a military operation, according to a source with long-standing close ties to the highest levels of China’s political and military leadership. But the Russians presented the upcoming military operation as a “limited operation to recover a lost Russian province”. [and] reunify Russia within historical borders”. This narrative matched China’s on Taiwan – although it was made clear that the Russian operation was not to interfere with the Winter Olympics in Beijing, which ended on February 20 – four days before the start. Putin’s invasion.

More importantly, in a confidential “friendship without limits” appendix was a guarantee of mutual security that Russia had been seeking for decades from China but had so far been unable to obtain. said the source. Like Article 5 of NATO – that an attack on one member is an attack on all – Beijing and Moscow have pledged to come to each other’s military aid in the event of a foreign invasion of their territory and if particular conditions were met as to the cause of such an invasion. invasion. This extremely cunning and prescient clause, inserted at Chinese insistence, would effectively exclude recently annexed territories in wartime, freeing Beijing from any commitment to respond to attacks on annexed territories in Ukraine.

The scale of the Russian military operation – in particular the well-kept secret of the lightning attack on Kyiv, which even Lavrov was unaware of until February 21 – took Beijing by surprise. Although the Chinese officially backed Putin diplomatically, blaming NATO for provoking the conflict, there was deep (and well-founded) concern that Putin had overstepped his bounds and would provoke the West into a united front that a limited operation in the Donbass would have avoided. Putin’s nuclear escalation threat on February 27 alarmed the world, including the Chinese. One of Beijing’s main priorities was for the Russo-Nato confrontation to “avoid any nuclear escalation and help achieve a ceasefire”, said the source, who maintains regular personal contact with NATO leaders. People’s Liberation Army (PLA). However, Putin had – imprudently in the eyes of the Chinese – played his most dangerous card from the start of the conflict.

So when, a few days later, a further escalation threatened in the form of an offer by the Polish government to supply Ukraine with its entire fleet of Soviet-era MiG-29 fighters, the Chinese were concerned. In truth, the Polish MiGs were unlikely to make much of a difference on the battlefield. The 26 to 33 Polish MiG-29s had been manufactured in the early 1980s for the East German Air Force and had been sold in Warsaw for the symbolic sum of €1 each in 2003. Romania, which had 20 similar MiG-29 aircraft, had decommissioned them many years ago. Nevertheless, a NATO country supplying fighter jets of any type to Kyiv represented an important symbolic, if not necessarily operationally significant, step towards direct NATO involvement in the conflict. Initially, Washington was positive. But the next day, March 8, the Pentagon abruptly reversed its position, declaring the Polish proposal “untenable”.

What changed Washington’s mind? It was partly an urgent and confidential initiative involving former European leaders and senior officials, and ultimately endorsed by the Chinese. Since Putin’s Feb. 27 statement on nuclear readiness, the PLA had also reached out through military (as opposed to diplomatic or political) channels to senior Russian officers with whom they had made personal contact over the course of years of joint military exercises. and military procurement negotiations. Beijing’s goal was to ensure that even if there was a political decision to use nuclear weapons, the Russian military would insist on sticking to its longstanding military nuclear doctrine of using them only if they were provoked by attacks on Russian soil. Through these unofficial “second track” contacts, Washington and the PLA agreed – uncharacteristically, given the deterioration of relations under the presidency of Donald Trump – that if the United States ended the MiG agreement, the generals in Beijing would do their best to defuse Putin’s nuclear threat on an operational level. “It worked,” the Chinese source said. ‘The [US] decided that the provision of aircraft was a step too far.

Although this backdoor initiative of early March has gone unreported before, the fact that the United States has maintained a fundamentally cautious stance on the supply of strategic arms to Ukraine throughout the war effectively confirms that Washington remained keenly aware of Chinese concerns, which were shared with many of the larger nations of the European Union. Despite a dramatic escalation in supplies of money and military hardware – including the NATO-standard 155mm artillery capable of firing guided shells and the High Mobility Artillery Rocket System – NATO refrained from supplying attack aircraft, helicopters, NATO-standard tanks, long-range guns, battlefield missile and cruise missile systems.

At the same time, Chinese support for Moscow has remained equally cautious. Beijing has offered diplomatic and informational support – but has ruled out significant military cooperation, forcing the Russians to buy drones from Iran, cannibalize home appliances for computer chips and try to buy up helicopters, missiles and rockets. missile defense systems to military customers in the developing world. The threat of US sanctions on their global operations has prompted many major Chinese banks such as ICBC, New Development Bank and Asian Infrastructure Investment Bank to withdraw credit and funding from Russia. Chinese energy giants such as Sinochem have also suspended all Russian investments and joint ventures. In August, UnionPay – the Chinese equivalent of Visa and Mastercard – also ceased cooperation with Russian banks, citing sanctions. The material motivation for Beijing companies to withdraw from Russia was clear: before the war, China was doing $100 billion in trade with Russia (expected increase of $30 billion this year thanks to increased oil imports), but more than 1,500 billion dollars with the United States and the EU. .

With Biden and Xi’s joint condemnation of the nuclear weapons threat in Bali earlier this month, March’s so-called “track two” agreements have become “track one” public policy. Thanks to Wang’s shuttle diplomacy, NATO and China have effectively aligned themselves on not escalating the conflict between Ukraine and Russia, according to the Chinese source. In a series of meetings with NATO leaders since early September, Wang pledged to use China’s considerable influence in Moscow to dissuade Putin from using nuclear weapons, while in return , NATO said it would not supply strategic weapons to Ukraine.

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At the Bali summit, Xi (supported by Indian Prime Minister Narendra Modi) publicly called for “a return to diplomacy and stressed the urgency of finding a peaceful solution”. It is a position that has not yet been officially adopted by NATO, which insists that the Ukrainians will decide when to come to the negotiating table. But many high-level voices within NATO – for example US Chairman of the Joint Chiefs of Staff Mark Milley and Frenchman Emmanuel Macron – have independently suggested that Kyiv should prepare for peace talks. And China’s security guarantees on Russia’s borders before the invasion made in February could play an important role in building a face-saving exit ramp for the Kremlin in opposition to likely security guarantees from the Kremlin. NATO for Ukraine.

China’s price for restoring peace? Beijing hopes to improve relations with NATO and Europe and put an end to a bloody and futile war that its ally Putin launched so recklessly. In Ukraine, China, in the source’s words, “is finally positioning itself as our last hope for peace in this world.” Ukrainians, who will likely be asked to sacrifice land for peace, may not agree.

Russian missiles pounded Ukraine on Thursday, killing four people, as Moscow continued a campaign of attacks on cities and energy infrastructure after withdrawing its forces from the southern city of Kherson.

President Volodymyr Zelenskyy said in his overnight address that the wave of missile attacks had left more than 10 million people without power, more than a quarter of the current population.

Missiles hit buildings where three families lived in Vilniansk, a city east of the Dnieper in the Zaporizhzhia region, according to Kyrylo Tymoshenko, a senior official in the president’s office. He said in a message on the Telegram messaging app that four people had died. The area has suffered some of the heaviest shelling in the country in recent weeks.

The attacks demonstrate a strategy adopted in response to setbacks on the Moscow battlefield. Russian forces attempted to destroy Ukraine’s power grid, exploiting the country’s dependence on energy to power businesses and heat homes as winter approaches. In the latest example, a gas production facility in eastern Ukraine suffered a “massive attack” on Thursday, Naftogaz, a national oil and gas producer, said on its website.

Ukrainian air defense systems shot down four cruise missiles and five drones in the Kyiv region, the city’s military administration reported on Telegram.

Russian forces have struck civilian targets in Ukraine for months with missiles fired from land, sea and air, but attacks escalated sharply on October 10 in response to an explosion at the bridge that connects Russia to the Crimean Peninsula. The explosion, which the Kremlin blamed on Ukraine, capped weeks of Russian losses in the south and northeast.

Another serious setback was the decision last week by Russian forces to withdraw from Kherson, the only provincial capital Moscow captured during the war.

Since then, the daily attacks have only heightened the sense of outrage felt by many Ukrainians.

Zelenskyy posted dash cam video to Telegram on Thursday, taken from an unidentified vehicle in what he said was the central Ukrainian city of Dnipro. The car is driving along a tree-lined highway in the rain when an explosion erupts ahead. The vehicle brakes suddenly as a hail of debris and leaves hits the windshield.

“Here is another confirmation from the Dnipro that the terrorists want peace,” Zelenskyy said. “A peaceful city and people’s desire to live a normal life. Going to work, on a business trip. Missile fire!”

Fourteen people were injured in attacks in Dnipro on Thursday, officials said. The mayor of the city, Borys Filatov, announced on Telegram that a government employee had been injured.

“This is a coat and this is a fragment,” he said, posting a photo of a shrapnel-torn blue coat. “The coat belongs to an employee of the town hall. My subordinate. Now she is operated.

Ukraine’s air defense system destroyed six missiles fired from the air off the coast near Odessa, but one civilian was injured and a logistics facility was hit, the city council said on Telegram. In the Dneprotrovsk region, 6,000 residents were without power after more than 70 shells hit Nikopol, a town on the banks of the Dnieper, Valentyn Reznichenko, head of the regional military administration, said on Telegram.

Jerome Powell has had to guide the US central bank through the upheaval caused by the pandemic, and it has been a difficult journey. Some say Powell, who is not an economist by training, will go down in the history books for all the wrong reasons. Chief among them was his stubborn refusal to abandon the “transitional” scenario as US inflation hit its highest level in 40 years. He refused to change US monetary policy for months because he thought the price hike would be temporary. Mohamed El-Erian, Allianz’s chief economic adviser, called it “probably the worst inflation call in Fed history.” Economist Stephen S. Roach has drawn comparisons to Arthur Burns, who led the Fed with an iron fist from 1970 to 1978 but failed to prevent the worst episode of “stagflation” in history the United States. How Powell will ultimately be remembered will depend on his ability to bring inflation under control without plunging the United States into a deep recession. Falling stock markets and soaring interest rates suggest that investors and traders have lost some of their faith in Powell.

Vladimir Poutine

Vladimir Putin’s decision in February to invade Ukraine shook global markets. The Russian president’s decision to go to war fueled inflation by helping to push oil prices above $100 a barrel for parts of the year. Rising energy prices and Western sanctions against Russia are putting particular pressure on European economies that depend on Russian oil and gas. Putin withdrew energy supplies from Europe to help drive up prices, undermining Germany’s growth model and hammering the euro. The war has disrupted wheat exports in a region that produces a quarter of the world’s supply, causing food prices to spike temporarily, further contributing to global inflation that central banks have tried to combat. Putin’s war has also moved the world economy away from globalisation, a potential far-reaching impact on markets. Its threat to use tactical nuclear weapons is, among other things, now a serious market risk.

Kirsten Sinema

Senator Kyrsten Sinema of Arizona nearly sank her fellow Democrats’ Cut Inflation Act – before saving it. The $750 billion health care, tax and climate bill passed the Senate with its support in August, but only after a provision that would have ended the so-called saying a carried interest loophole that benefits private equity managers. As a result, Sinema’s influence on private market investing will reverberate for years to come. Like fellow Democratic maverick Joe Manchin, Sinema has posed a major hurdle in the equally divided Senate for President Joe Biden’s agenda. But with Sinema’s backing, the IRA – which also includes a 1% tax on corporate stock buybacks and a 15% minimum tax rate on large corporations – was approved by the Senate and passed. signed into law by Biden on August 16.

Chris Littles

Fired by Amazon (AMZN) after leading a protest against coronavirus-related working conditions at the start of the pandemic, Chris Smalls has returned to lead his former Staten Island warehouse to become the first Amazon warehouse to vote to unionize. Dismissed as not smart or “articulate” by an Amazon executive in a leaked memo, Smalls is now president of Amazon’s new union, which is trying to organize other Amazon warehouses and has become one of the most important names in a booming job. movement. Smalls has testified before lawmakers on Capitol Hill, met with President Joe Biden and is traveling across the country to speak with other labor leaders as companies like Amazon and Starbucks (SBUX) continue to face pressure of their workers and shareholders. Just a year after taking office, Amazon CEO Andy Jassy has faced constant questions about Amazon’s labor issues. (At Starbucks, the chief operating officer who was responsible for the company’s response to organizing efforts has left the company.)

Larry Summers

In early 2021, when virtually everyone viewed US inflation as transitory, Larry Summers was pounding the table with nonconsensual warnings: that President Biden’s $1.9 trillion COVID-19 relief package would “trigger inflationary pressures of a kind we haven’t seen in a generation” and that the Federal Reserve was “dangerously complacent” about the risk of upside prices. Slowly in 2022, markets rallied to Summers’ view as his warnings came to fruition. The inflation rate in the United States reached 9.1% in the 12 months ended June 2022, the fastest pace in four decades. As a result, the US central bank changed its policy to deal with inflation, and the delayed response risked tipping the world’s largest economy into recession. A former US Treasury secretary and White House economic adviser, Summers spoke with Biden in 2022 and widely shared his thoughts on economic policy and pushed for a strong Fed response to inflation, including a unpopular call for soaring unemployment to curb rising prices. .

Liz Truss

Liz Truss spent only 44 days as British Prime Minister, but her impact on the markets was felt strongly. Just two years ago, Truss was best known in the UK for a clumsy promotion of cheese at a political conference. But Truss steadily rose through the ranks of the Conservative Party to become foreign secretary in Boris Johnson’s government, then won a battle to become prime minister in September 2022 after Johnson’s outrageous departure. Propelled into the global spotlight following the death of Queen Elizabeth II two days into her term as Prime Minister, Truss and new Chancellor Kwasi Kwarteng have come under scrutiny from financial markets after their so-called mini-budget was caused the pound sterling to fall to a record low and UK bonds to fall. that the Bank of England had to intervene. Facing criticism from Britain’s central bank, the International Monetary Fund and her own political party, Truss abandoned her tax cut plans and resigned in October. His short tenure serves as a model for the kinds of country-specific problems lurking beneath the surface of these financial markets, and the tensions between governments and central banks that currently exist.

Janet Yellen

Janet Yellen was a trailblazer as the first female Fed chair and now the first female Treasury secretary. Earlier this year, Yellen admitted she hadn’t anticipated the surge in inflation. “I think I was wrong then about the path inflation would follow,” Yellen said in May of his previous insistence that rising prices were a short-term consequence of pandemic shocks. Yellen denied having spoken of his intention to leave the Biden administration before the next presidential election. Few officials in the United States have his vast experience in managing the economy or his close contacts with world leaders as the rest of the world enters a perilous post-pandemic era. But first, “I think getting inflation down is key,” Yellen said in a recent NPR interview.

Volodymyr Zelensky

Not so long ago, it might have seemed inconceivable that a comedic Ukrainian leader could have a big impact on global markets. But in 2022, markets latched onto every word of Volodymyr Zelensky as traders watched developments in Russia’s invasion of Ukraine. It did not go as Moscow hoped. On March 28, for example, when Russia gave the first indication that it might be willing to accept less than full control of Ukraine, financial markets cheered. Ironically, progress on the Ukraine front sent US investors home the next day as efforts by central bankers to respond to runaway inflation led to the first 2s Treasury spread reversal. /10s has been closely followed since Aug. 30, 2019. Zelensky shocked the world with charismatic leadership that rallied Western support and Ukraine’s robust downfall counteroffensive in its south and east. Ukraine’s success on the battlefield has had massive implications for energy and food markets, and beyond.

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STOCKHOLM, Nov 9 (Reuters) – High inflation and war in Ukraine have heightened risks to Sweden’s financial system and banks should bolster their resilience by limiting dividends, the central bank said in a regular report on Wednesday. financial stability.

The central bank said the biggest risk for banks was their exposure to highly indebted commercial property companies, but high levels of household debt were also a problem.

“Economic development leads to an increased risk of significant credit losses among Sweden’s major banks,” the central bank said in a regular financial stability report.

“Since the risks have now increased, the Riksbank considers that banks should be restrictive regarding large dividend payments and share buybacks.”

Sweden’s economy has grown strongly this year despite inflation approaching double digits, while rising interest rates have boosted banks’ income from lending to businesses and households.

Earnings at Sweden’s major lenders – Swedbank, Nordea, Handelsbanken and SEB – have soared in recent quarters, but clouds are looming on the horizon, with most economists expecting a significant slowdown in the growth next year.

In a recent forecast, banking group Nordea said it expected gross domestic product (GDP) to contract by 2.0% in 2023.

The commercial real estate sector has increased its borrowing sharply over the past 10 years, with debt reaching 2.3 trillion Swedish kronor ($215 billion) in 2021 – about 42% of GDP – from 1.3 billion in 2012 , according to the Riksbank.

Real estate companies account for about 43% of banks’ business loans.

A credit crunch would force companies to reduce their investments, affecting construction and economic growth. It could also result in significant write-downs on property values.

“In the worst-case scenario, higher borrowing costs could lead real estate companies to default on their payment obligations,” the Riksbank said in its report.

Rising interest rates and inflation have already hit the housing market, with prices expected to fall 20% by next summer from their peak in the spring of this year.

Although the labor market remains strong, unemployment is expected to rise and some households will struggle to cope with rising mortgage costs and soaring food and energy bills.

Shares of major Swedish banks traded lower on Wednesday, reflecting a drop in the broader European index. (.SX7P)

($1 = 10.7591 Swedish krona)

Reporting by Simon Johnson; edited by Niklas Pollard and Angus MacSwan

Our standards: The Thomson Reuters Trust Principles.

America will continue to be a major export destination for garments made in Bangladesh as Washington works with Dhaka to improve conditions in factories across the country, a senior US official has said.

The United States has been Bangladesh’s main export destination for decades.

Its position was maintained despite higher inflationary pressure on consumers resulting from escalating commodity prices amid the Russian-Ukrainian war and the fallout from Covid-19.

Bangladesh’s overall exports to the United States grew by 49.35% to $10.41 billion in fiscal year 2021-22, the highest pace of growth, according to data from the Promotion Bureau. exports. Revenue was $6.97 billion in 2020-21.

Apparel shipments brought in $9.01 billion in the last fiscal year, growing 51.68% year-on-year from $5.94 billion a year earlier.

“We are working closely with the Government of Bangladesh to address a number of issues we have identified as well as with a number of business partners in Bangladesh to strengthen labor rights,” said Arun Venkataraman, Deputy Secretary at the Commerce for Global Markets and Director General of the US and Foreign Commercial Service in Dhaka last week.

He was in Dhaka to open the new American Trade Service Center in the capital.

The United States is working with the government, the International Labor Organization, and the European Union to improve working conditions and rights in Bangladesh.

“I think we can consider supporting Bangladesh as one of the most competitive garment producers in the US market,” Venkataraman said when asked if America would provide export opportunities in duty free for locally made garments to US markets.

“We recognize and appreciate the important role of the garment sector in Bangladesh.”

Currently, the United States does not offer any country duty-free market access, known as the Generalized System of Preferences (GSP). The term of the last GSP program ended in 2020 and the US Congress has not revived it since.

The United States suspended the SGP facility for Bangladesh in 2013, citing poor labor rights and workplace safety following two industrial disasters – the Tazreen Fashions fire and the Rana Plaza building collapse.

Venkataraman said American companies are incredibly enthusiastic about investing in the energy sector.

“They are really going beyond traditional energy to new form of energy, renewable energy, other sustainable energy elements and green technology to invest in Bangladesh.”

According to him, American companies see Bangladesh as a major market as the country moves up the development ladder and millions of people are lifted out of the poverty line and into the middle class.

“Every sector is open to growth.”

American entrepreneurs want to invest in healthcare, digital economy, technology, infrastructure, dredging and Dhaka airport expansion.

The senior official stresses that US investors want a stable and predictable regulatory environment shaped by the rule of law and transparency.

“They are looking for ways to support the use of digital tools and they are looking for digital policies aligned with international best practices.”

Venkataraman cited another strength of Bangladesh, which is its large pool of skilled labor, which attracts investors.

“Bangladesh is very fortunate to have a large youth workforce which can be a demographic dividend if used properly.”

He said the United States would continue to work with Bangladesh on the proposal to develop a business model, as local apparel exporters have requested tariff concessions on shipping apparel items made from U.S. cotton.

A few years ago, the Bangladesh Garment Manufacturers and Exporters Association proposed to the United States to offer preferential market access to garments made from the main textile raw material imported from the largest economy in the world. world.

During the conversation, Venkataraman hailed the country’s astonishing development success and its rise to the rank of developing country in the group of least developed countries.

LONDON (AP) — The Bank of England has announced its biggest interest rate hike in three decades as it tries to fend off stubbornly high inflation fueled by Russia’s invasion of Ukraine and politicians. economic disasters of former Prime Minister Liz Truss.

The bank raised its benchmark rate by three-quarters of a percentage point on Thursday, to 3%, after consumer price inflation returned to a 40-year high in September. The aggressive move to keep inflation out of the economy was in line with market expectations after a more cautious half-point increase six weeks ago.

The interest rate decision is the first since the Truss government announced £45bn ($52bn) in unfunded tax cuts that sparked financial market turmoil, pushed up costs mortgages and forced Truss out of office after just six weeks. His successor, Rishi Sunak, has warned against spending cuts and tax increases as he seeks to undo the damage and show Britain is committed to paying its bills.

The rate hike is the Bank of England’s eighth consecutive and largest since 1992. It comes after the US Federal Reserve on Wednesday announced a fourth straight three-quarter point jump as central banks around the world combat inflation which erodes living standards and slows the economy. growth.

THIS IS A BREAKING NEWS UPDATE. AP’s previous story follows below.

LONDON (AP) — The Bank of England is expected to announce its biggest interest rate hike in three decades on Thursday as it seeks to fend off stubbornly high inflation fueled by Russia and the US invasion of Ukraine. disastrous economic policies of former Prime Minister Liz Truss.

Economists expect the bank to raise its benchmark rate by at least three-quarters of a percentage point, to 3%, after consumer price inflation returned to a 40-year high in September. Additionally, wholesale natural gas prices, although down from their August peak, are expected to rise further this winter, pushing up energy bills and further fueling a cost of living crisis.

The interest rate decision is the first since the Truss government announced £45bn ($52bn) in unfunded tax cuts that sparked financial market turmoil, pushed up costs mortgages and forced Truss out of office after just six weeks. His successor, Rishi Sunak, has warned against spending cuts and tax increases as he seeks to undo the damage and show Britain is committed to paying its bills.

The rate hike will likely be the Bank of England’s eighth consecutive and largest since 1992. It comes after the US Federal Reserve announced a fourth straight three-quarter point jump on Wednesday as central banks around the world world are tackling inflation which is eroding living standards and slowing down. economic growth.

Britain’s central bank could choose to hike rates by up to 1 percentage point to show it’s serious about tackling inflation after being criticized for being slow to react earlier this year, says Luke Bartholomew , Senior Economist at abrdn.

“The Bank of England will try to look through the volatility caused by government policy and gas price movements, and focus on underlying inflationary pressure,” Bartholomew said in a note to investors. “However, given the impact on household spending of such large inflationary moves and the risk to inflation expectations, this adds further complication to an already very difficult policy decision for the bank.”

Central banks have struggled to contain inflation after initially believing price rises were fueled by international factors beyond their control. Their reaction intensified in recent months when it became clear that inflation was taking root in the economy, translating into higher borrowing costs and higher wage demands.

The war in Ukraine has driven up food and energy prices around the world as shipments of natural gas, grain and cooking oil have been halted. This came on top of inflation which started to pick up last year as the global economy began to recover from the COVID-19 pandemic.

Europe has been particularly hit hard by a spike in natural gas prices as Russia responded to Western sanctions and support for Ukraine by cutting shipments of fuel used to heat homes, generate electricity and the oil industry electricity and European nations competed for alternative supplies on world markets.