The writer is a professor of economics and public policy at Harvard university and former chief economist at the IMF
Is a modest burst of post-pandemic inflation necessarily a bad thing? With the US experiencing brisk inflation (5.4 per cent in the 12 months ending in June) there is growing talk of an inflation Armageddon if the Federal Reserve falls too far behind the curve. There are real risks. But maybe after a decade of below-target inflation, a few years of it being mildly above target, say 3 per cent, might be positively a good thing.
US inflation today is much more like good news than bad. Prices are rising mainly because the US economy is doing vastly better than seemed possible a year ago — thanks to early and aggressive US vaccine procurement, continuing huge macroeconomic support and a surprisingly successful shift to remote work.