Benign neglect on US inflation

Just as investors and policymakers were right to look through the “transitory” inflation of 2021-2022, they should also strip out the “transitory” disinflation of 2022-2023

Swings have masked the modest but persistent acceleration in underlying price pressures. 

Markets are currently pricing in the most benign possible outcome

 Many Fed officials would be unwilling to force the economy into a downturn just because inflation stabilised around 4 per cent a year, instead of 2 per cent. 

Matthew C Klein Financial Times 15 August 2023

https://www.ft.com/content/ac8300ce-9456-44c9-a763-42dd65df0e0a


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