S&P Global said Wednesday that central banks have signaled higher interest rates for a longer period.
"Demand pressures remain too strong in many economies, particularly for services," it said in a report. "Labor markets are still tight and core inflation is stubbornly high, although headline inflation has eased."
The agency stressed that if overall inflation remains "sticky," it expects interest rates would need to go higher for longer. "The transition to a higher rate regime also has negative implications," it said.
"Headline inflation is coming down quickly, but core inflation remains stubbornly sticky. The former, driven by declines across fuel, electricity, and gas prices as last year's spike drops out of the data, is good news for households as it increases real wages," said the report.
On the other hand, the agency warned that if central banks tighten monetary policies too much, economic growth would sharply slow.
"Central banks have slowed the pace of policy hikes, but the next moves are likely up. Inflation remains well above target and, even allowing for the lagged effects of previous rate hikes to work through the system, more needs to be done to bring inflation convincingly back toward target," it noted.
