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Has the Inflation Process Become More Persistent? Evidence from the Major Advanced Economies
The sustained surge in inflation around the world following the pandemic has raised the possibility that the inflation process has become more persistent. Such a rise in persistence could result from firms and households putting greater weight on past inflation outcomes in their price- and wage-setting decisions than they did in the recent past, say, because they have less conviction that inflation will return promptly to target. Greater persistence would, in turn, complicate central banks' task of bringing inflation back to target. Against the background of the recent slowdown in the disinflation process, this note ... (full story)