Current supply shortages have been driven by several forces which look set to persist for six to twelve months. They have caused sharp increases in some prices (most notably energy and used cars) and also limited output. Central banks are unlikely to respond to specific shortages and should only tighten policy if aggregate demand exceeds aggregate supply on a sustained basis. Since this seems unlikely in most economies, we still expect the pace of tapering and then tightening to be very gradual.
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