Inflation – how high is too high?

While the current rise in inflation to near double-digit rates is clearly undesirable, it begs the question of at what point the costs of sustained higher inflation outweigh the benefits. We think that the tipping point is around 5%. This suggests that it would not dent the long-run economic outlook if central banks failed to bring inflation all the way back to their targets. Drop-In (Weds, 6^th July): How far has 2022’s food supply shock raised the stakes for monetary policymakers and governments? Join this 20-minute session to find out about the market outlook and the economic risks around elevated food prices. Register now.