In search of the exit

Major analysis feature. As policymakers’ in the United States and the Eurozone attention turns to how to unwind their emergency measures of 2008-09, much depends on how the American and eurozone recoveries develop.

The authors of the analysis present the four scenarios of how economic events could unfold – and how the two central banks would be likely to react.

Scenario one: Steady as she goes – inflation and interest rates low

Scenario two: The only way is up – recovery faster than expected

Scenario three: Back to the pump – deflation, ongoing recession

Scenario four: Burnt by hot oil – stagflation