The economy and financial markets will (probably) be hit hard

​Pimco's former CEO and chief investment analyst, Mohamed El-Erian (now president of Queens Cambridge and adviser to Allianz) is someone I admire for his ability to observe and synthesise data relating to the complex system that is the world economy.  I've taken excepts from an article he published in the FT last week in which he suggests that because central banks have been slow to react to inflation they now have to tighten even more dramatically.
Fed and ECB still behind the inflation curve, by Mohamed El-Erian
"Central banks risk a pile-up of monetary policy tightening as inflation expectations become more embedded." In other words, he worries that people come to expect high inflation and so factor this into wage rises and price rises; then central bankers will have to be very harsh to get demand out of the economy, e.g. doubling monthly mortgages payments or cost of business loans by raising interest rates.
Already central bankers themselves are very concerned that they have let the inflation genie out of the bottle: "the key message coming out of recent meetings of central bank policymakers is that inflation is higher and more persistent than expected — and the risks to their projections are tilted to an ever greater rate of price rises."
But they realised their mistake too late as their actions so far are "partial at best, still too slow and risks an over-compensation later this year".   Over-compensation I interpret here as meaning much higher interest rates to rid economies of high inflation expectations by hammering demand. Expect large rises in base rates and on long governments, and therefore corporate bonds.
There is a knock-on effect: "this continued go-slow approach [by central bankers to raising interest rates] will force [them] to tighten more this year than they would have had to otherwise" which then will damage the world economy and financial markets as recession fears grow.  Higher rates of return on all financial assets will be demanded, resulting in falling share, for example (my assumption).
Wage-price spiral? "There is a risk that price and wage setting shifts from seeking..To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1