I don’t have a good answer for you and I think we are still learning so much after the Pandemic experiences; supply-side induced inflation may be still working through our system with a lag. And as Claudia Sahm mentioned, raising interest rate was not the right solution totally. As long as we don’t have external shocks, the economy should tolerate well a higher interest rate for longer. This last mile of disinflation takes time.
Totally agree. Just hope that GDP can hang in there.
Something I found quite interesting was from the latest IMF Econ update which blames government spending for the majority of lingering inflation. Not sure if we will lap that soon.
Fun read and good insight on the US economy.
How persistent do you think this recent bout of inflation is going to last?
Thanks for the kind comments and question!
I don’t have a good answer for you and I think we are still learning so much after the Pandemic experiences; supply-side induced inflation may be still working through our system with a lag. And as Claudia Sahm mentioned, raising interest rate was not the right solution totally. As long as we don’t have external shocks, the economy should tolerate well a higher interest rate for longer. This last mile of disinflation takes time.
Totally agree. Just hope that GDP can hang in there.
Something I found quite interesting was from the latest IMF Econ update which blames government spending for the majority of lingering inflation. Not sure if we will lap that soon.
Link: https://imgur.com/a/gsld4PB
Agree - a 6% fiscal deficit in good times can only add to inflation!!