Tighter policy in 2021 would have had ill effects – NY Fed study
Authors argue inflation would have fallen only modestly while global demand would have suffered
A more forceful monetary policy response from mid-2021 would have had only a modest effect on inflation while significantly lowering global output, according to research from the Federal Reserve Bank of New York.
The study, published yesterday (February 27), says most of the persistent component of inflation globally comes from supply shocks. These force central banks into making trade-offs, because raising rates tends to have a detrimental effect on economic output.
The authors – Ozge Akinci
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