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How inequality affects the long-run outlook

Substantial fiscal support helped to prevent a big rise in income inequality within developed economies during the pandemic. But inequality was rising in many DMs before then and could revert to that trend if technological advances disproportionately benefit the better-off. While trends in inequality are unlikely to be a major determinant of long-run economic performance, high or rising inequality could still weigh slightly on economic growth and contribute to equilibrium interest rates staying relatively low.

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