Central banks are beginning to back away from the emergency stimulus they used to combat the worldwide recession caused by the pandemic.

The Federal Reserve’s Jerome Powell and colleagues have begun debating when and how to scale back their asset-purchase program, while China’s People’s Bank has already begun to curtail credit growth. Brazil, Mexico, Turkey, the Czech Republic, and Russia have all raised interest rates, and others are beginning to reveal how they may reduce assistance.

The global pivot will continue to take place in stages. Even those who are growing hawkish believe the current increase in inflation will subside shortly and promise to avoid disrupting financial markets, so the European Central Bank and Bank of Japan are likely to keep doling out aid to their economies. Sentiment and demand could still be thrown off by the delta variant’s journey.

Balance sheets will continue to increase, albeit more slowly, and borrowing costs will remain near historic lows.

According to Bloomberg Economics:

“Central bankers are almost unified in their belief that the present bout of high inflation is only temporary. With Europe, Japan, and India anticipated to join the United States in a swift rebound in the second half, the concept of transitory may easily be stretched, if not broken.”