The writer is North American economist at PimcoThe question for macro forecasters has evolved from if we’ll see a recession in large developed economies, to when and how deep?

Shallow recessions across developed markets are still the most likely outcome from the aggressive central bank policy responses to rising inflation. However, the risk of financial market contagion triggering a more severe recession looms large.

Policy rates at the Federal Reserve, European Central Bank and Bank of England are all moving higher and are expected to linger there for longer, given that elevated inflation across developed markets looks broad-based and entrenched. Indeed, shallow recessions might now be required to arrest that inflation — an outcome that has not been easy to engineer in the past.