Could this provide a ‘Goldilocks’ scenario?
Economic commentators and central bankers seem at last to be taking inflation risk seriously, rather than assume that current inflationary pressures constitute a short-term phenomena as the global economy bounces back from the deep Covid-linked recession. But as with the Nixon/Johnson era of the 1960s, post the Vietnam war, once inflation takes hold and input shortages feed through into price rises and wage inflation, unless central banks tighten early, inflationary spirals can gain momentum. A debt-fuelled binge of public and private sector spending and tight supply of key materials combine into the perfect inflation storm and, to date, central bank pronouncements have suggested that policy is to become less accommodating, but not for some time yet.