The world’s central banks raced at an extraordinary pace over the past year to cool inflation, but it hasn’t proved enough—yet.

Economic growth remains mostly solid and price pressures strong across affluent countries despite sharply higher interest rates.

Why haven’t growth and inflation slowed more? Much of the explanation lies in the pandemic’s weird effects and the time it takes for central-bank rate increases to curb economic activity. Additionally, historically tight labor markets have fuelled wage gains and consumer spending.

First, the unusual nature of the pandemic-induced 2020 recession and the ensuing recovery blunted the normal impacts of rate hikes. In 2020 and 2021, the U.S. and other governments provided trillions of dollars in financial assistance to households that were also saving money as the pandemic interrupted normal spending patterns. Meanwhile, central banks’ rock-bottom interest rates allowed companies and consumers to lock in low borrowing costs.

Households and businesses continued to spend heavily in recent months. Families tapped their savings, which were replenished by solid income growth. Businesses kept hiring thanks to pandemic-related labour shortages and large profits.

“There are just a lot of embedded pandemic-era forces that are working against this tightening,” Tom Barkin, president of the Federal Reserve Bank of Richmond, told reporters last week.

Two industries traditionally sensitive to interest rates—autos and construction—offer examples.

Pandemic-related shortages of semiconductor chips limited the supply of cars for sale, leading eager buyers to pay higher prices for the vehicles available. Although U.S. construction of single-family homes tumbled last year, construction employment grew over the past 12 months. Fuelling job growth were supply-chain bottlenecks that extended the time needed to finish homes and a record amount of U.S. apartment construction, which takes longer to complete.

U.S. single-family housing construction has rebounded recently thanks to historically low numbers of homes for sale. Many households refinanced during the pandemic and locked in low mortgage rates—a good reason to stay put. “I didn’t fully anticipate how much the move in interest rates would convince people not to put their houses on the market,” Barkin said.

Normally, the Federal Reserve’s rate increases force heavily indebted consumers and businesses to rein in spending because they have to pay more to service their loans. But consumers haven’t overextended themselves with debt over the past two years; household debt service payments accounted for 9.6% of disposable personal income during the first quarter, below the lowest levels recorded between 1980 and the onset of the pandemic in March 2020.

“A lot of the imbalances you might anticipate at this point in the cycle just have not had the time to build up,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank.

Second, government spending has continued to bolster growth, cushioning economic shocks that proved less catastrophic than expected. While Europe’s energy crisis helped to tip the region into a shallow recession over the winter, the region skirted the deep downturn that some analysts had forecast. European governments pledged up to $850 billion to support spending.

This year falling oil and natural-gas prices have pumped up economic growth by putting money into consumers’ pockets, boosting confidence and easing pressures on government budgets. The price of a barrel of oil has fallen by nearly half in the past year, from around $120 to less than $70—below its level before Russia’s 2022 invasion of Ukraine sent prices soaring.

The reopening of China’s economy supported activity in the country’s many trading partners, while weak domestic growth prompted Beijing this month to provide new stimulus.

In the U.S., fiscal policy has provided more oomph for the economy this year. Federal funding continues to flow from President Biden’s roughly $1 trillion infrastructure package approved in 2021 and two pieces of legislation signed last year that provide hundreds of billions of dollars to boost renewable-energy production and semiconductor manufacturing.

A rock waiting to drop

Third, it takes time for higher interest rates to ripple through the economy and cool growth and inflation. The Bank of England first raised interest rates from near zero in December 2021, while the Fed and the European Central Bank lifted off in March 2022 and July 2022, respectively.

By some estimates, the first two-thirds of the Fed’s rate increases only restored rates to a level that was no longer pushing on the gas pedal, while the last third slowed the economy by pressing the brakes. The upshot is that policy has restricted growth for just eight or nine months, Atlanta Fed President Raphael Bostic wrote in an essay published last week.

Chicago Fed President Austan Goolsbee compared the potential coming impact of the Fed’s 5 percentage points in rate increases to the unseen hazards faced by Wile E. Coyote, the unlucky cartoon character. “If you raise 500 basis points in one year, is there a huge rock that’s just floating overhead…that’s going to drop on us?” he said in a recent interview.

Dario Perkins, managing director at the research firm TS Lombard, said higher rates are slowing growth in ways that aren’t obvious, such as by causing employers to cut unfilled jobs or companies to forgo expansion. “It might appear that monetary policy isn’t working when, in fact, it is,” he wrote in a recent report.

Climbing the last mile

To be sure, some central banks might not have done enough to cool demand. The ECB, for example, increased its key rate to 3.5% this month, but it is still negative when adjusted for inflation—potentially a stimulative level.

Many economists still anticipate a recession over the next six to 18 months, either because of past rate increases or those to come.

Just how much higher to raise rates is hard to judge because of mixed signals about economic activity. In the U.S., hiring has been strong, but average hours worked declined in May and the number of people filing for state unemployment benefits has climbed in recent weeks to its highest levels since late 2021.

Falling energy and grocery prices helped lower U.S. inflation to 4% in May from a four-decade high last summer of around 9%, according to the Labor Department’s consumer-price index. The breadth of price increases has narrowed. In May, less than 50% of all prices in the CPI rose by more than 5%, down from 80% of the index at one point last year.

Central bankers remain anxious, however, because measures of so-called core inflation, which exclude volatile food and energy prices, have declined much less. Those readings tend to better predict future inflation.

Central banks in Norway and the U.K. announced half-point interest-rate increases last week to address persistent inflation. Central banks in Canada and Australia recently resumed rate increases after pausing, pointing to higher service-sector inflation and tight labor markets.

The Switzerland-based Bank for International Settlements, a consortium of central banks, warned in a report released Sunday that reducing inflation to many central banks’ 2% target could be harder than expected.

Easy gains from lower energy- and food-price inflation have been banked. The longer high inflation lasts, the more likely it is that people will adjust their behaviour and reinforce it, the BIS said. In that scenario, central banks might find they need to cause a sharper downturn to force inflation down to their goal.

“The ‘last mile’ may pose the biggest challenge,” the BIS said.

How nice should you be at work?

We’ve supposedly moved on from the era of the militaristic chief executive who barks orders and threats. Most of us agree: We don’t like jerks. Be kind, we implore our kids.

Then we get to the office. We’ve got direct reports to rally, colleagues in other departments to convince and bosses who claim they want honest feedback. Speak with hesitation and you’re ignored. Handle your team with kid gloves and you’re a pushover, not a force to be reckoned with.

“I, personally, think you’re too nice a person to be in the job that you’re in.” That’s what Rep. Greg Murphy (R., N.C.) told Katherine Tai, the lead trade negotiator for the U.S., this spring during a hearing. His comments summed up feedback so many of us, especially women, have heard. We’re too bubbly or kind. We deploy too many apologies or exclamation marks. Yet when we do too little of all that, we’re overly aggressive.

“I want to be a nice person,” Sarah Kleinberg, the director of operations at a healthcare consulting firm, told me. She has realised, though, that being nice often makes others feel good, without actually moving a project forward or prompting a team member to improve.

“You have to have the level of confidence to be beyond people-pleasing,” she says.

‘Customer-service voice’

Many people, desperate not to offend, resort to what speaking coach Samara Bay calls “customer-service voice.” It’s that high-pitched, upspeak-y tone meant to inform the barista, I think you might be out of oat milk?

What are we saying when we use that tone? “I’m not powerful, don’t worry,” Bay says.

Making yourself non intimidating and as small as possible might work earlier in careers, she adds, making the people in charge feel secure. But as we ascend, or try to, the wavering voices can confuse others. Do it enough and people might question whether you’re leadership material, Bay says.

She recommends a vocal exercise for speaking more confidently. Pretend that you’re introducing yourself—“Hi, my name is Rachel”—while throwing a pretend ball against the wall. Match your vocal pitch to the ball’s trajectory. When you throw the ball down to the ground, you’ll hear your voice droop in energy along with the ball. Then throw the ball up, and notice the way your words sound as if you’re half taking them back. Last, throw the ball straight and allow your words to follow through, too.

“It’s the weirdest feeling to say something and mean it all the way to the end,” Bay says. “It feels brave.”

No hedging allowed

When pitching an idea, don’t undercut yourself with hedging language, says Bob Bordone, a negotiations coach. He cringes at questions like: “Would you be willing to consider letting me work remotely on Fridays?”

“It makes me just want to say no because it’s such a weak thing,” he says.

Instead, he says, start with a statement: “I wanted to talk to you about working out a new schedule.” Assure that any agreement you come to would be good for your manager and the company.

When someone tells you no, Bordone suggests trying: “How can we tackle this, even though we see it differently?” You sound strong and assertive, but not nasty, he says.

Good news for the nice guys among us: You don’t have to give up your personality to be taken seriously.

“I’m, 99.9% of the time, a jovial, happy-go-lucky guy,” says Colton Schweitzer, a user-experience designer and educator in Vancouver, Wash. When he doesn’t like the direction a project is going, he pushes back by asking questions and inserting the occasional joke.

“I’m smiling,” he says, “Even when I’m saying, ‘Are you sure about that?’”

Because he’s so pleasant, his serious moments carry weight. At one job, he cheerfully took on more work when colleagues asked—until his manager asked him to pick up the slack for an underperforming employee. He gave a resolute no. His manager dropped the issue, and seemed surprised and impressed by his response, he says.

“It’s like a currency,” he says of invoking a more stern style. “When I use it, it’s really valuable.”

Less yelling, more intensity

To be tough but not jerky, set clear expectations, says Harry Kraemer, a professor of leadership at Northwestern University’s Kellogg School of Management.

Before teaching, Kraemer rose to be chief executive of Baxter International, the healthcare company where he worked for 25 years. As a new manager, he would try to be everyone’s breezy friend, shrugging it off when his team turned in a project hours past deadline. The second time it happened, he devolved into yelling, only to realise he hadn’t made the stakes clear from the start.

“If I focus on being liked, the chance of being respected is very low,” he says.

He adopted a new leadership style of, “I’m not going to surprise you.” He says the yelling just made him look out of control, but following through with consequences worked. When his team missed sales targets, he gathered them for a two-hour debrief—no smiling, his voice intense.

“I don’t need a sorry,” he would tell them. “Hit the number. Do what you told me you were going to do.”

Dinah Davis, a Realtor in Highlands, N.C., still remembers advice an old friend gave her years ago on the golf course. The friend was a skilled neurosurgeon known for being direct, not touchy-feely.

“I have a great bedside manner,” she told Davis. “I just don’t have time for it.”

The advice was freeing for Davis, a former lawyer more comfortable with staunch negotiations than chirpy small talk.

“Do you want your pilot to be nice?” Davis asks. “Or do you want your pilot to get the plane on the ground?”