Inflation might well keep rising in 2021 – but what happens after that?

By Brigitte Granville* – The Conversation

Re-blogged

The US Federal Reserve has just reassured the markets that it doesn’t expect inflation to get out of hand in the coming months. It comes as concerns about serious inflation damaging the global economy have reached fever pitch, particularly since recent Labor Department data showed that American inflation rose 4.2% over the 12 months ended April – the highest since the global financial crisis of 2007-09. In the euro area, inflation seems certain during the rest of this year to break out above the European Central Bank target of “close to but below 2%”.

Central bankers on both sides of the Atlantic say that these price rises are a temporary consequence of the whiplash effect of the COVID-19 pandemic on demand. Supply chains in everything from commodities to semiconductors have been disturbed ……

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*Brigitte Granville is Professor of International Economics and Economic Policy at the School of Business and Management, Queen Mary, University of London, and the author of What Ails France

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