Controlling inflation
Warwick Business School
wbs.ac.uk
In 2022, inflation soared to 9% pa in the US and over 10% in the UK and the Eurozone. In many other countries it went even higher in the worst global inflationary episode since inflation targeting began in the early 1990s. Central banks need to learn from this experience. What went wrong – was it all to do with a severe rise in energy prices after the unexpected Russian invasion of Ukraine? Or did it have its roots much earlier in the fiscal and monetary support offered to the real economy during the pandemic? In other words, was it due mainly to a supply shock or a demand shock? Either way, why was the inflation not anticipated and why is it taking so long to bring inflation back to target? Was this just the result of a series of unprecedented events that won’t re-occur? Or does something need to change in the policy framework? If these questions can’t be answered, with the help of the wider economics community, then the independence and authority of central banks will be brought into question.
In 2022, inflation soared to 9% pa in the US and over 10% in the UK and the Eurozone.”
6
Made with FlippingBook Learn more on our blog