Economists draw swords over how to fix inflation

A dispatch from the intellectual battlefield


  • by
  • 07 5, 2023
  • in Finance and economics

Foraslong as inflation has been high economists have fought about where it came from and what must be done to bring it down. Since central bankers have raised interest rates and headline inflation is falling, this debate may seem increasingly academic. In fact, it is increasingly important. Inflation is falling mostly because energy prices are down, a trend that will not last for ever. Underlying or “core” inflation is more stubborn (see chart 1). History suggests that even a small amount of sticky underlying inflation is hard to dislodge.

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