Sep 23, 2022
How sticky will the inflation we are currently seeing prove to be? Market consensus is that the current price increases are temporary and inflation will go back to a more benign 2% by 2024. This view is by the way shared by the Fed. Unfortunately, as shown in a recent Bloomberg column by John Authers, it took on average 10 years in advanced economies to normalise inflation once it had passed 5%. If history is any guide and we are not finding a disruptive monetary policy remedy soon, interest rates could therefore stay higher for longer to keep prices under control.