IMCV - Outlook 2022 - The Return Of Inflation

• The result of the unprecedented fiscal and monetary stimulus has been a rapid return to unemployment rates that are higher, though only about 2%, than before the COVID pandemic. US GDP has recovered all the ground lost in 2020 and is now at a record high.
• Monetary policy remains highly stimulative with interest rates at or below zero in all of the developed world. Fiscal policy also remains highly stimulative with government deficits at or near record levels and government debt at a record high percentage of GDP.
• Inflation is at the highest level in thirty years, though it is not nearly as bad as the crisis in the late 1970s and early 1980s.
• What are the sources of inflation, will the causes get worse or better, and what policy, if any, is appropriate for this situation?

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