Pandemic increases risk of high inflation

Pandemic increases risk of high inflation

The pandemic has increased the odds that the US will eventually experience a period of high inflation, principally because we expect the Fed to be less committed to ensuring price stability in the future. The higher public debt burden, slower global labour force growth, and the possibility that globalisation will be partly reversed, are additional reasons to expect inflation to gradually rise over the longer-term to 3% or 4%. Any deflationary pressure from technology is likely to be muted, while several unique factors linked to the pandemic mean that the risk of a near-term slide into deflation is low.
Paul Ashworth Chief North America Economist
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US Economics Weekly

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