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Inflation looks increasingly transitory, but this can change
There are signs that some economies may experience a phenomenon known as ‘reheating’: a rapid turnaround that causes inflationary pressures to re-emerge
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Inflation has fallen more rapidly than expected, and so the market may expect the Fed to lower interest rates sooner than planned.
PHOTO: REUTERS
Tyler Cowen
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It seems like only yesterday that the inflation debate was all about “Team Permanent” versus “Team Transitory”. But after several months of low inflation data, a kind of consensus has arisen: Inflation has revealed itself to be transitory.
This is only a temporary (or should I say transitory?) consensus. There are signs that some economies, including that of the United States, may experience a phenomenon known as “reheating” – a rapid turnaround that causes inflationary pressures to re-emerge. Is such a phenomenon possible?
