What If Inflation Today Is Out of the Fed’s Control?

For a textbook instance of demand-side inflation, think about {that a} central financial institution makes a shock announcement it’s going to handle rates of interest and undertake asset purchases in order to engineer a doubling of whole spending all through the financial system over the following 12 months. If individuals imagine it can hit that focus on, they need to anticipate that in a 12 months’s time, costs, together with wages, might be about double what they’re now.