Central bankers have had a change of heart.
Until this month, they had argued that inflation was transitory, the expression of unique historical circumstances, and therefore need not drive their decision making. In recent weeks, however, major central banks have reassessed inflation risks and signaled that they are now more worried about its persistence.
This shift makes sense and caution is warranted. But economic policymakers, both central bankers and government decision makers, must remain flexible, attuned to the facts and ready to adjust expectations and responses to rapidly changing conditions.
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