RT Journal Article
SR Electronic
T1 How Transitory Is Inflation?
JF The Journal of Portfolio Management
FD Institutional Investor Journals
SP jpm.2023.1.468
DO 10.3905/jpm.2023.1.468
A1 Rob Arnott
A1 Omid Shakernia
YR 2023
UL https://pm-research.com/content/early/2023/02/04/jpm.2023.1.468.abstract
AB Inflation can take far longer to return to normal levels than most realize. Although transitory inflation is possible, it is hardly a sensible central expectation. Across 14 developed-economy countries over the past half-century, the authors analyze the behavior of inflation once a country’s inflation rate surges past various thresholds and study how long a burst of inflation typically lingers. If history is a guide, inflation can take far longer to return to normal levels than most people realize. Transitory inflation is certainly possible, but it is hardly a sensible central expectation. Messaging and policy response from the US Federal Reserve Bank should reflect the relatively high empirical risk that inflation may persist.