11 Chief Economists Outlook Policy-makers face trade-offs The global backdrop of weak growth and persistently high (albeit moderating) inflation presents policy-makers with challenges of historic proportions at the start of 2023. Chief among these will be the need to bring inflation much closer to the 2% target without choking off growth, but the challenges run deeper. Accumulated societal strains from the last years as well as climate mitigation and adaptation present pressing investment needs in numerous countries. In the immediate term, central banks are the key economic decision-makers. F ollowing a year of sharp and coord inated tightening, the c hief economists su rveyed expect the moneta ry policy stance t o remain constant in most of the world thi s year (see Figure 4). In Europe and the US, a majority of respondents (59% and 55%, re spec tively) expect further ti ghtening in 2023. The Federal Reserve a nd the European Cent ral Bank have both in dicated that su ch additional tight ening is on the way, but it is notable that th e two banks’ mos t recent rate increases i n December were smalle r, at 50 basis points , than previous 75 basis point hikes in the current tightening cycle. Nonetheless, a q uarter of respon dents expect looser monetary policy in the US and Europe by the end of 2023. Figure 4. Monetary policy A year from now, what is your expectation for monetary policy in the following geographies? United States Latin America and the Caribbean Europe East Asia and Pacific South Asia Middle East and North Africa Looser The same Tighter 53 Sub-Saharan Africa 81 China 53 Central Asia 7 80 13 20 67 13 13 69 19 6 71 24 7 80 13 27 14 59 28 56 17 27 18 55 50 40 10 Source: Chief Economists Survey, December 2022