Central banks should ‘overestimate’ inflation persistence, says economist
Academic argues central banks should act as if exogenous shocks are likely to be persistent
A leading economist has cautioned central bankers against repeating the same mistakes that led to the Great Inflation in the 1970s, saying the US Federal Reserve has underestimated the possible long-term effects of unexpected shocks such as supply chain disruptions on prices.
Carl Walsh, emeritus professor at the University of California, Santa Cruz, sounded the warning in May when presenting a paper at a conference held by the Bank of Japan’s research arm, the Institute for Monetary and
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