Central bankers worry that a new era of high inflation is beginning

Jerome Powell, the chairman of the Federal Reserve, described a shift in the central bank’s policy framework. “The economy is always evolving,” he noted. “Our revised statement reflects our appreciation…that a robust job market can be sustained without causing an unwelcome increase in inflation.” It was a pivot informed by a long period in which prices as often rose by less than the Fed preferred as by more. Two years on, the Fed faces very different circumstances: rock-bottom unemployment, strong wage growth and rates of inflation far above the central bank’s target. On August 26th, at an annual jamboree for central bankers in Jackson Hole, Wyoming, Mr Powell sang a different tune. “Without price stability, the economy does not work for anyone,” he declared, and added that the Fed was prepared to impose economic pain to get inflation back to target. Just how much might be required remains anyone’s guess. But the economists and policymakers gathered under the Teton mountains repeatedly voiced a serious concern: that the global forces which in recent decades helped to keep inflation low and stable may be weakening—or reversing.