Inflation will probably melt away in 2022 – central banks will do far more harm trying to tackle it

By Brigitte Granville* – The Conversation

Re-blogged

It remains to be seen whether the omicron variant will shift Sars-CoV-2 towards becoming manageably endemic. But as and when this happens, there will still be “long COVID” to contend with. The latest headlines about inflation – a 7% annual rise in the US and more tough talk from Federal Reserve Chairman Jerome Powell about bringing it down – confirm that something similar is happening with the global economy: it will be shaped by the after-effects of the pandemic even when all restrictions have been lifted.

To understand how this overhang effect may play out in 2022 requires looking back at how the pandemic has affected growth and inflation. The key lies in …….

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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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