Economy

The iPhone maker did not immediately respond to a Reuters request for comment. Abbott, who joined Apple (NASDAQ:AAPL) in 2018, heads the iCloud service and is in charge of the platform that powers features such as Emergency SOS and Find My on iPhones as well as new features including iCloud data encryption.He previously held top roles at Twitter and Palm, and was a partner at venture capital firm Kleiner Perkins.Jeff Robbin, long-time Apple engineer, will take on Abbott’s responsibilities, Bloomberg News reported. Earlier this year, Insider reported that vice president of services Peter Stern, who oversaw an expansion of Apple’s paid subscription businesses, particularly its television offering Apple TV+, would be leaving the company. Shares in Apple were up about 3.4% in afternoon trading. More

UK engineering business IMI has said it is diversifying its supply chain away from China in response to worsening international relations.Chief executive Roy Twite said that the FTSE 250 business, which produces parts for the energy and transport sectors, will focus its China manufacturing on producing parts for domestic customers.“Our principle on China is: China for China,” he said. “We’re investing in China for the Chinese market and making sure that if things develop in the wrong direction, in terms of geopolitics, that actually the overall business is as resilient as it can be.”The move by IMI is the latest sign that businesses are rethinking their reliance on China as a manufacturing hub after the country’s strict Covid lockdowns and as geopolitical tensions and worries about free trade and supply chains continue to grow. Twite said IMI generates 9 per cent of sales in China but produces only 5 per cent of its goods there, adding the group will invest in manufacturing to ensure it can meet demand in the country.At the same time, it is looking to reduce the reliance of its global supply chain on China. After western governments imposed wide-ranging sanctions on Russia following its invasion of Ukraine, many businesses have questioned the possibility of similar restrictions on China if it targeted Taiwan.Twite said he did not expect any sanctions against China would be as severe, partly because trade and financial flows between China and the west are so great.But he said IMI, which has taken a £9mn hit from exiting Russia, is looking to source goods closer to home, adding that the company has been expanding a factory in the Czech Republic.Its results on Friday indicated that the company has benefited in the short term from the fallout of Russia’s invasion.Sales rose 10 per cent to £2bn in the year to December, while profits before tax increased 13 per cent to £346mn.Twite said growth at the company, which manufactures products including valves for liquefied natural gas producers, had been driven partly by countries rushing to develop alternative energy sources.“A lot of the gas to Europe would have come through Russian pipelines. Clearly there’s a desire to make sure Europe has different suppliers,” he said. “[In the US and the Middle East] they’re expanding their capacity, their ability to export to meet that new demand.” More

Today’s top storiesGermany has asked Switzerland to sell some of its decommissioned Leopard 2 tanks as it struggles to cobble together two battalions of the fighting vehicles to send to Ukraine.UK prime minister Rishi Sunak is refusing to rush Britain back into the EU’s €95.5bn Horizon science programme, despite the prospect being hailed by the country’s scientists. Academics separately warned of the closure of more than 150 projects as EU funding that has supported them tapers out.CRH, the world’s largest building materials company, is planning to move its listing from London to New York in a new blow to the UK’s capital market alongside SoftBank’s rejection of a London listing for Cambridge-based chip designer Arm. Boards of other companies are discussing similar moves. The trend was shrugged off by London Stock Exchange chief David Schwimmer. For up-to-the-minute news updates, visit our live blogGood evening.The stream of hot inflation numbers over the past month has pushed US borrowing costs to 2007 levels, intensifying the debate about how high interest rates have to go to rein in soaring consumer prices. “I don’t recall this dramatic of a reassessment of economic conditions in such a short time period, with the exception of major shocks like Covid-19 and the collapse of Lehman Brothers,” said Rick Rieder, an investment officer at BlackRock, the world’s largest money manager.US labour costs for the last quarter were yesterday revised up, adding to central bank concerns, as our Big Read explains, that high pay settlements will keep inflation at elevated levels. The news on labour costs follows a jump in the core personal consumption expenditures price index, the Federal Reserve’s preferred gauge of inflation, and a less-than-expected cooling in the consumer price index. The stronger-than-forecast run of data continued today with new information on the US services sector, reinforcing fears that the Fed would keep interest rates higher for longer to combat the inflationary threat.There are also renewed inflation fears across the Atlantic. New data yesterday showed eurozone consumer price growth dipping only slightly from 8.6 per cent to 8.5 per cent in January. Analysts now think the European Central Bank will keep raising rates beyond an expected 0.5 percentage point increase on March 16. In Germany, the bloc’s biggest economy, inflation actually increased from 9.2 per cent to 9.3 per cent, with similar rises in France and Spain.The UK outlook is different, according to Bank of England governor Andrew Bailey. He signalled to financial markets on Wednesday that it was wrong to assume the BoE would raise rates any further. Unlike in the US and the eurozone, British inflation had not outstripped forecasts and the economy was “evolving much as we expected it to,” Bailey said. The BoE still expects inflation to fall rapidly, particularly in April when energy bills are likely to rise by much less than at the same time a year ago.Other aspects of the UK cost of living crisis are as serious as ever: new survey data on Tuesday showed record rises in food prices in February of 17.1 per cent would add £811 to the average British household’s annual bill.Part of the uncertainty in markets around inflation is down to central banks struggling to communicate their intentions, writes Andy Haldane, former BoE chief economist and new FT contributing editor.Unless they show a bit more imagination on targets, he writes, the “mini-monetary mistakes of the recent past” are likely to morph into the “maxi-monetary mistakes of the future”.Browse our global inflation tracker to see how your country compares.Need to know: UK and Europe economyColumnist Helen Thomas says this week’s Brexit deal is still a bit of a “nothingburger” for the City, while Welsh first minister Mark Drakeford told the FT it created “perverse incentives” to move freight destined only for Northern Ireland to direct routes, diverting business away from the Welsh ports of Holyhead and Fishguard. Hopes however are rising that the deal could enable UK participation in the CPTPP transpacific trade bloc. UK government plans to revoke all EU-derived legislation will cause more uncertainty and do nothing to increase economic growth, according to two-thirds of businesses in a new poll.The Centre for Cities think-tank blamed the UK’s weak productivity on a slowdown in London, saying the capital since 2007 had trailed behind Paris, Brussels and New York and could benefit from more devolution. Economics editor Chris Giles suggests less restrictive planning regulations, and more liberal immigration policies for high-skilled employees could also help. Need to know: Global economyChinese president Xi Jinping is poised to launch a “forceful” overhaul of his government at the annual National People’s Congress, which begins on Sunday. His most trusted acolytes are set to oversee key sectors including finance and tech, strengthening the Communist party’s grip on the economy. Brazil’s economy shrank 0.2 per cent in the final quarter of 2022, highlighting the challenges ahead for president Luiz Inácio Lula da Silva. The weak performance, driven by shrinking industrial output and a cooling of services activity, ended five consecutive quarters of growth.Western allies are pushing the United Arab Emirates to halt exports of critical goods to Russia and clamp down on suspected sanctions busting.Need to know: businessArm was also in the news over China’s blocking of the plan to offload its troubled joint venture in the country. Chinese officials are determined to keep the company directly involved in the unit at a time when the US is trying to cut the country off from cutting-edge chip technologies. Korean chipmakers have expressed alarm over the tough conditions for US subsidies such as sharing excess profits. Companies editor Anne-Sylvaine Chassany says Joe Biden can teach the EU a lesson or two on big-state “dirigisme”.Washington has put 28 Chinese groups on a trade blacklist for allegedly breaching US sanctions by sending technology for nuclear and missile programmes to third countries or procuring banned products for China’s military. The global economy may be weak but the appetite for flying remains strong. Low cost airlines are reporting record booking sprees, US carriers cannot find enough planes and Air India has placed one of the biggest orders in aviation history. Lufthansa today said revenues had doubled, while Qantas said it would add 8,500 new jobs.If you haven’t been following the scandal at South Africa’s Eskom, our Big Read has it all, including a tale of cyanide-laced coffee. Science round upThe lab leak theory is back. A new assessment from the US energy department and comments from the FBI that Covid-19 sprung from a Chinese laboratory have rekindled a fierce political debate in Washington.Mistakes thrown up by Generative AI programmes are sowing seeds of doubt in serious science, says commentator Anjana Ahuja. Investors are less worried: Inflection AI, a one-year-old start-up, is on course to have raised up to $1bn in just a year. US editor at large Gillian Tett is sceptical about AI possibilities in the property industry.Scientists are aiming to develop a “biological computer” powered by millions of human brain cells. “Organoid intelligence” could outperform silicon-based machines while consuming far less energy if the scientists are successful, with the first applications in neuroscience and medicine.A US biotech is trialling the active ingredient in magic mushrooms as a potential therapy for anorexia. Global pharma correspondent Hannah Kuchler explores the potential for psychedelics and how a break with reality can transform people’s relationship with the real world.Wildfires in subarctic boreal forests are emitting rapidly increasing amounts of carbon dioxide, according to a study using new satellite technology. On a more positive note, the International Energy Agency said the fall in gas supplies from Russia had tempered the rise in emissions in Europe.“I do not see us having a problem getting to Mars.” British astronaut Tim Peake gives a wide-ranging interview on the future of space exploration to the FT’s Henry Mance.Some good newsPeople across the UK have been treated to a stunning display of the aurora borealis or northern lights twice this week. Favourable meteorological conditions over the next two years mean the prospects for Brits witnessing the phenomenon again are growing.

Something for the weekendThe FT Weekend interactive crossword will be published here on Saturday, but in the meantime why not try today’s cryptic crossword? More

US companies are starting to cut their reliance on Chinese supply chains and seek out alternative shipping routes in Asia as relations between the two superpowers deteriorate, according to the head of one of the world’s biggest container companies.Rodolphe Saadé, chief executive of France’s CMA CGM, predicted that the overhaul would take several years because potential beneficiaries like India, or south-east Asian countries such as Vietnam and Thailand, still lack the infrastructure to accommodate the very largest container ships. “We have clients telling us they do not want to put all their eggs in one basket in China, so they are looking for other solutions,” he said in an interview. “The movement has begun, but not yet at large volumes. It will take time. Maybe in five or 10 years, if India and south-east Asia build port terminals that can accommodate large ships, then they will play a different, bigger role,” he added. Saadé did not name any of the US companies.The Covid-19 pandemic and the Russian invasion of Ukraine have highlighted the risks of global supply chains underpinning everything from energy to medical supplies.

Rodolphe Saadé: ‘After what we’ve experienced in the past two and a half years, anything that happens after that is a hard landing’ © AFP via Getty Images

The motivation for companies to examine their supply chains in China has been heightened by fears over the economic and political fallout were Beijing to order an invasion of Taiwan, a democratically ruled country over which China has long claimed sovereignty.Shipping companies have been one of the biggest winners from globalisation but are now facing the abrupt end of a three-year boom that delivered record profits. The pandemic-driven disruption that drove freight rates higher has eased as Covid-19 restrictions end and consumers cut back spending. The slowdown left CMA CGM with its first contraction since the pandemic-induced boom, with revenues dropping 3.6 per cent in the fourth quarter to $16.9bn. Profits also declined to $3bn, with margins sliding to 33.7 per cent from 46 per cent in the third quarter. AP Møller-Maersk and MSC Mediterranean Shipping Company have also been hit by the steep drop in freight rates over the last six months. On routes from China to the US west coast, these are 85 per cent below their peak.The shipping industry has long been prone to boom-and-bust cycles. “After what we’ve experienced in the past two and a half years, anything that happens after that is a hard landing,” Saadé said. The boom helped drive CMA CGM to a record net profit of $24.9bn last year, while revenue rose 33 per cent to $74.5bn. Ebitda profit margins hit almost 45 per cent last year, up from 12.4 per cent in 2019, before the pandemic. Saadé said that about 10 per cent of group profit would be paid out in dividends, with the rest reinvested in the business. Given the Saadé family own 73 per cent of the group, they have been spectacular winners from the shipping boom. The family has a net worth of almost $24bn, according to Bloomberg.Although the shipping group does not give specific guidance, Saadé projected CMA CGM would turn a profit again this year, adding he was optimistic that the US would avoid a recession. Next year could be a tougher, however, as shipping companies take delivery of new vessels equipped to meet stricter environmental standards, causing a potential overcapacity problem, he added. Like other shipping executives, Saadé argued that a shift away from China, particularly among US companies, did not signal an end to globalisation, but an evolution towards more regional supply chains.Rolf Habben Jansen, the chief executive of German shipping group Hapag-Lloyd, said this week that India could be one of the big beneficiaries.“Certainly a lot of people are looking at India as an alternative or an addition to China,” Habben Jansen said. Like its rivals, CMA CGM has been using the cash amassed during the boom to fund an acquisition spree. It has acquired more port infrastructure and is diversifying with a big push into logistics businesses, including “last mile” delivery operations as well as other forms of freight such as air cargo. It bought a 9 per cent stake in Air France-KLM as part of a partnership with the airline group. “We will continue to do acquisitions in our core businesses,” said Saadé.Additional reporting by Oliver Telling More

European Central Bank officials have warned that they expect to raise interest rates to record highs after eurozone inflation for February was higher than forecast, even as economists predict a rapid easing in price pressures from the summer.Persistently high inflation, driven by stronger rises in the price of food, goods and services that are offsetting a sharp decline in energy price growth, is a worrying sign for the ECB that they may have to raise rates higher than ever before to curb price pressures.“If we don’t get clear signals that core inflation is going down, we’ll have to do more,” Belgium’s central bank boss Pierre Wunsch, who sits on the ECB governing council, told reporters in Brussels, saying it could mean that “looking at rates of 4 per cent would not be excluded”. Data released this week showed annual inflation in the 20-country single currency zone dipped to 8.5 per cent in February, down from 8.6 per cent in January but above economists’ predictions for a bigger fall to 8.2 per cent. Core inflation, which central bankers watch closely as it excludes energy and food prices to give a clearer picture of underlying pressures, hit a record high of 5.6 per cent last month.Coupled with recent US data showing upward price pressures on prices and wages, the eurozone data added to evidence that inflation is likely to stay uncomfortably high for longer than forecast, increasing workers’ calls for higher wage rises to offset soaring living costs.“We’re going from an energy shock to another with different drivers such as salaries and fiscal policy,” said ECB vice-president Luis de Guindos, pointing to the inflationary effect of large government support measures. Headline inflation was likely to keep decelerating to below 6 per cent by mid-year, he predicted, while warning that “underlying inflation is going to be more stable”.The ECB has raised rates by 3 percentage points since last summer. Financial markets are pricing in a jump in the bank’s deposit rate to 4 per cent later this year, up from 2.5 per cent. That would overtake the 2001 peak of 3.75 per cent. Policymakers have said another half percentage point rate rise is almost certain at the ECB’s meeting on March 16 and several said more rises may be needed after that.“My personal expectation is that the increase we intend for our March meeting — 0.5 percentage points — will not be the last one,” said Slovenian central bank governor Boštjan Vasle. The biggest weekly rise in borrowing costs for eurozone governments this year was a reflection of how investors were lifting their bets on how high the ECB will raise rates. Germany’s two-year borrowing costs rose this week from 3 per cent to more than 3.2 per cent, a 14-year high.Economists said price pressures were still likely to dissipate rapidly from this summer. “March data should be more encouraging and we still expect core inflation to come down by the summer,” said Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management. Sandra Phlippen, chief economist at Dutch bank ABN Amro, said services inflation could “move higher” in the first half of the year, driven up by rising wage pressure. But she said the trend should reverse by the second half “as the economic slowdown and deteriorating overall labour market conditions are expected to reduce wage growth”.Dirk Schumacher, an economist at French bank Natixis, predicted the ECB would cut its inflation forecast for the first time in over two years when it publishes new predictions in two weeks’ time. “I am quite convinced that inflation will be lower in three months — including core. I am obviously a lot less sure by how much,” he said, pointing out that energy prices have fallen sharply, supply chain pressures are abating, consumer spending looks set to weaken and wage growth remained relatively contained.Anna Titareva, economist at UBS, said the Swiss bank’s eurozone pay tracker showed wage growth had picked up to 3.4 per cent in the year to January, up from 3.2 per cent the previous month “with a risk of further acceleration”. But she predicted inflation in the bloc would still fall from 5.3 per cent this year to 2.3 per cent next year, before finally hitting the ECB’s 2 per cent target in 2025. More

Economic turmoil would normally deter entrepreneurs from starting a business, but it seems that the Covid-19 pandemic has given a shot in the arm to wannabe founders across the world. Anecdotes of start-ups being launched from dining tables in lockdown are backed by bumper business creation numbers at the height of the pandemic, and the strength in start-up activity has persisted. Despite the global slowdown, rising interest rates, and shaky supply chains, going it alone still seems to be in vogue: new business formation continues to outpace pre-pandemic levels in many advanced economies.In 2022 new business applications filed by Americans totalled 5.1mn — down on the previous year’s record of 5.4mn — but still more than 40 per cent higher than in 2019. Business creation in France hit a record high. In the UK, more than 750,000 companies incorporated in the year to March 2022, second only to the record-breaking year before. New enterprises in Singapore last year also rose slightly on 2019 levels. The resilient appetite to kick-start new ventures may offer inspiration for the thousands of tech workers being laid off in the current slowdown. But business creation has not just been about swanky Silicon Valley-style offshoots. In the EU, registrations of companies in transport and financial activities, alongside information and communications, remain much higher than before the pandemic. In the US, hospitality, healthcare and retail have also seen considerable growth since 2019.Sturdy business creation has supported the recovery from the pandemic, unlike after the global financial crisis when it slumpedin major economies. Business deaths have also picked up, and will inevitably do so further, given high energy prices and the rising cost of credit. Becoming an entrepreneur is a tough gig too: 90 per cent of start-ups fail. But the rise in start-up activity overall offers a powerful force for innovation, new jobs, and productivity. US business registrations in 2022 from companies likely to hire staff were up28 per cent on pre-pandemic levels.Economic shifts have been a key factor. Facilitated by digitalisation, the gig economy — essentially flexible and freelance working — boomed in the 2010s. The shift towards working from home, accelerated by the pandemic, has only cemented this trend. A greater ability to use working hours flexibly made starting a business easier. Indeed, first-time solo entrepreneurs have driven the rise in start-ups in the UK. Changes to where we work and how we shop has also led to new opportunities — reflected in the surge of new online retail firms.Personal finances have been a driver, too. With people stuck at home and spending less on commuting and socialising, household cash buffers soared in rich countries during the pandemic, and remain strong. These cushions have made business ventures more appealing. For others made redundant or furloughed, or simply hard hit by the high cost of living, starting a business was a necessity to boost income.Launching a new venture is also simpler now. The time taken to start a business in the OECD dropped sharply over the past decade. Technology, such as cloud computing, has slashed set-up costs. Finance from angel investors and crowd equity platforms is more widely accessible. A shift in attitudes could be a factor too. Economic disruption since 2020 may have ignited a “you only live once” mindset: why wait to start that dream business? And stories of ventures forged in the pandemic have raised interest in becoming an entrepreneur.Whatever the reason, resilience in start-up activity even as pressures mount on the survival of existing enterprises, is a sign that creative destruction is in train. Long may it continue. More

Senior lawmakers in Washington are calling for a reinvigoration of trade talks between the US and UK, after Britain and the EU struck a deal over Northern Ireland that removes a huge source of tension between Washington and London. The push comes after members of Congress from both sides of the aisle applauded the Windsor framework on post-Brexit trading arrangements in Northern Ireland as a turning point in the bilateral relationship between the US and the UK, and a sign that a more pragmatic leadership had returned to the British government under prime minister Rishi Sunak. “Ever since the Brexit vote, which was now seven years ago, the biggest stumbling block has by far been the Northern Ireland issue, and the fact that the UK and the US did not see exactly eye to eye,” Brendan Boyle, a Democratic congressman from Pennsylvania, told the FT.“There is no question that a major irritant in the bilateral US UK relationship has been taken off the table,” he added.“I think hopefully with this behind us, in short order there will be [trade] discussions,” added Bill Keating, a Democratic lawmaker from Massachusetts. Chris Coons, the Democratic Senator from Delaware, introduced legislation on Thursday giving Joe Biden the authority to negotiate a free trade agreement with the UK © Oliver Contreras/AFP/Getty ImagesChris Coons, the Democratic senator from Delaware and a close ally of US president Joe Biden, introduced legislation on Thursday that would give the president the authority to negotiate a free trade agreement with the UK. The bill would give Biden two years, or until a few months into a hypothetical second term, to secure an agreement and fast-track a vote in Congress to approve any deal. The proposal was co-sponsored by John Thune, a senator from South Dakota who is the second-most senior Republican in the upper chamber of Congress. “The resolution of the special status of Northern Ireland post Brexit was a necessary precondition to the negotiation . . . now that is done, we think the time is right for FTA negotiations between the US and UK,” said one congressional aide. Thune said the proposal — which would need to be approved by both chambers of Congress and signed into law by Biden — marked an “important step towards a strong and hopefully longstanding trade agreement with the world’s fifth-largest economy”.Biden, a proud Irish-American, welcomed the Windsor framework earlier this week, issuing a lengthy statement saying he was “proud of the role the United States has played for decades to help achieve, preserve, and strengthen” the peace enshrined in the 1998 Good Friday Agreement. The president said he looked forward to “continuing to work closely” with Northern Ireland, the British and Irish governments and the EU “to further that peace and prosperity”.Katherine Tai, the US Trade Representative, told Bloomberg on Thursday that the Biden administration had “observed” the breakthrough in Windsor “with a great amount of interest”. She added her office would “continue to pursue our ongoing dialogues with the UK, while remaining very interested in how the Windsor agreement is finalised and implemented”.Katherine Tai, the US Trade Representative, said the Biden administration had ‘observed’ the UK-EU breakthrough ‘with a great amount of interest’ © Saul Loeb/AFP/Getty ImagesAlthough Biden has sought to resolve some of the trade disputes with US allies that raged during the Trump administration, he has not pushed for big steps to liberalise trade. But Keating said Biden understood the need to strengthen America’s allies economically, particularly in light of rising competition with China. “Even for President Biden, who’s not a free trader, I think he sees a benefit of moving forward, but it’s incremental maybe,” Keating said. The White House has not yet said whether Biden will travel to Northern Ireland to commemorate the 25th anniversary of the Good Friday Agreement next month. Chris Murphy, the Democratic senator from Connecticut, said the agreement’s preservation had been “clearly a priority” for the US and Washington had been “pushing for the [Northern Ireland] protocol to get worked out”. But Murphy cautioned that any presidential visit could be contingent on the restoration of the Northern Ireland assembly at Stormont.“It would certainly seem to be a pretty important moment for a high level American delegation if the protocol is in effect and government Stormont is restored,” Murphy said. “It would be hard for there to be a high level American delegation in Belfast if there is no government in Belfast.”Keating said knowing Biden’s history, travelling to Northern Ireland next month was “something he would want to do” but a lot would depend on the president’s other commitments. Regardless, there was relief in Washington, particularly among Democrats and within the Biden administration, that Sunak had ushered in a less ideological government in the UK compared to those of his predecessors Liz Truss and Boris Johnson, and would be easier to work with. “I think that the new prime minister is a person whose background was to deal with the economy, he knew he had to get this issue behind him to move other issues forward,” said Keating. “He was very realistic.” More

The writer is an FT contributing editor and former chief economist at the Bank of EnglandEven economists are capable of love. And I love inflation targets, having been involved in their design and implementation in the UK, and across a number of other countries, for a period of more than 30 years. Yet recent events have cast a long shadow over inflation targeting, with inflation in most countries rising to multiples of the targets adopted by their central banks. The evidence of the past two years suggests two lessons for policymakers from two mini-monetary mistakes. The first is that central banks were initially too slow off the mark in tightening policy, misdiagnosing a large, lasting and broadly-based rise in prices as a modest, temporary and energy-specific one.The second is that central banks then engaged in a game of catch-up, both with inflation and their own credibility. This came just as demand was stalling, making a bad growth situation worse. It has cast doubt on the wisdom and sustainability of monetary tightening.This leaves many central banks struggling to communicate their intentions. Should monetary policy stick (to curb further harm to the economy) or twist (to curb future inflationary pressures)? This uncertainty has caused financial markets to whipsaw, and inflation expectations to wobble.What the world has experienced is an upward shift in the level of global prices. This has arisen from dislocations in global supply chains, buffeted by geopolitical crosswinds. As these supply chains have become both more fragmented and more fragile, prices have been pushed higher.Nowhere are these pressures more acute than in the supply of people and their skills. This has put acute upward pressure on pay as well as prices, resulting in stickier as well as higher global prices. High and sticky rates of underlying or core inflation attest to that.This shift upward in the equilibrium global price level is the mirror image of the golden age of globalisation that occurred after the second world war, when global supply chains lengthened and deepened, contributing to inflation persistently undershooting its target in many countries, including Japan, the US and eurozone.That golden era is now over, because supply chains take time to repair and reconfigure, particularly for people and their skills. The resulting reflation seems set to persist for a period measured in years not quarters.Large and lasting global supply shocks of this type put monetary policymakers on the horns of a dilemma. Do they tolerate above-target inflation — in line with the initial (in)action of central banks recently? Or do they continue to raise rates to counter high and sticky prices — in line with their subsequent (hyper)activity?The road so far has seen central banks run over in both directions, arguably first too soft on inflation and then too hard on the economy. The policy question, looking ahead, is how to prevent a recurrence of these mini-monetary mistakes in the event of persistent upward pressure on global prices.One option would be to stick with current targets and explain inflation overshoots as a sequence of unexpected price surprises. But because further overshoots would be anything but a surprise, that approach risks a further knock to central banks’ already depleted credibility.A second option, mooted recently on these pages, would be to shift up permanently the level of inflation targets, say to 3 per cent, reducing the scale of prospective inflation target misses. But whatever the substantive merits of a higher inflation target, this would be a misdiagnosis, as the problem at hand is a persistently higher level of global prices, not national inflation rates.A third, and preferred, option would be to use the flexibility naturally built into inflation targeting. This could be done either by transparently lengthening the horizon over which inflation is returned to target, say, from one-to-two years to three-to-four. Or, more radically, given we cannot be sure exactly how long higher global prices will persist, by suspending inflation targets for a temporary period, with an accompanying promise to re-fix them at the earliest possible future date.Flexing horizons, rather than the targets themselves, would protect the economy in the near term, while leaving inflation tethered to target over the medium term. It was for just such moments that inflation targeting was conceived as “constrained discretion”. Now is the time to exercise qualified discretion. With inflation high and inflation expectations fragile, it could be argued that any tinkering with the monetary frameworks which have served us well is the worst possible response. It is in fact the second worst.The worst would be to stick rigidly with existing targets and either continue missing them or inflict unnecessary damage on nascent growth. Far better a flexible third way that could steer a course between these rocks. If my love of inflation targets is to last and if these targets are to survive, that flexibility will be needed to prevent the mini-monetary mistakes of the recent past morphing into the maxi-monetary mistakes of the future. More