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This presentation delves into recent trends in inflation, exploring why it has consistently remained above target levels. Key concepts like the "Ketchup in the Bottle Effect" illustrate the complexities of inflation. The discussion also highlights expectations for the UK unemployment rate and the limitations of monetary policy. While monetary policy may not effectively support growth, it risks exacerbating economic challenges. As recovery begins, inflation could surge dramatically, leading to a potential final economic downturn.
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Monetary policy cannot help with growth, but it can make things worse (and is doing)
When there is some recovery, inflation will race higher => a final sting-in-the-tail recession to get out the inflation