![]() ![]() ![]() The answer has huge implications for monetary policy across the developed world, leaving economists at the US Federal Reserve and other leading central banks in a guessing game on interest rates that could affect economic growth for years to come.Īrend Kapteyn, Global Head of Economics and Strategy Research at UBS, argues that what makes the economist’s job harder is that much of the recent rise in prices has taken place in goods, which normally carry much less weight in central bank inflation modelling than other factors. Consumer prices have been rising sharply for the first time in years, leaving policymakers facing a stark question: is the resulting pick-up in inflation transitory, or are higher prices here to stay? Over the past decade at least, the digital revolution, among other factors, has pushed prices down across an ever-expanding universe, heralding the dramatic fall in technology such as televisions and computers and cheaper goods via online shopping.īut, in the aftermath of the Covid-19 pandemic, that long wave came to a crashing halt. ![]()
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