Central banks and markets around the world have abandoned scenarios of inflation being “temporary,” but there are concerns that the current surge in inflation may in fact be transitory or that it will soon fall. There is a very high possibility that the trend will begin to wobble. That's what former central bank officials and economists said at the Reuters Global Markets Forum.
“I still see the rise (in consumer prices) as temporary,” former Bank of Canada Governor Poloz said. While he acknowledged that inflation has lasted longer than market expectations, he said it was due to external shocks and that such movements may have already peaked. “Temporary” length means at least 24 months in this case, he said, given that externally driven commodity price rises took a year to the peak.
"The current sharp rate hikes by many central banks could ultimately hurt the economy and lead to a slowdown in demand," said Takahide Kiuchi, a former member of the Bank of Japan's Policy Board. "We can restore price stability, but at the cost of worsening the economy," he said.
Timothy Congdon, the founder of the Institute of International Monetary Research, said U.S. inflation was driven by a rapid increase in the supply of money to counter the economic hit from the coronavirus pandemic. He stressed a complete halt to currency growth.
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