One of the mysteries of the last decade is why, despite the strong recovery in the job market and the economy overall, inflation has remained stubbornly low in most Western countries. This conundrum reminds me of the jobless recovery after the 2001 recession. Back then, central banks saw the economy recover after the recession and inflation rise but job creation remained remarkably sluggish for many years. The result was that central banks in the US and Europe left interest rates too low for too long and helped fuel the housing bubble that led to the Global Financial Crisis.
Can central banks still target inflation?
Can central banks still target inflation?
Can central banks still target inflation?
One of the mysteries of the last decade is why, despite the strong recovery in the job market and the economy overall, inflation has remained stubbornly low in most Western countries. This conundrum reminds me of the jobless recovery after the 2001 recession. Back then, central banks saw the economy recover after the recession and inflation rise but job creation remained remarkably sluggish for many years. The result was that central banks in the US and Europe left interest rates too low for too long and helped fuel the housing bubble that led to the Global Financial Crisis.