
As world's major central banks meet this week and next and August U.S. inflation numbers are released, the puzzle over whether 2020's pandemic and the massive global economic rescue will ultimately prove inflationary or deflationary intensifies. The Fed is already on course to tolerate above target inflation in the years ahead and will continue to print money to achieve that, the ECB and Bank of Japan are expected to do likewise in their own time and ways. The surge in global money supply seen since the pandemic lockdowns - due to central bank bond buying, a scramble by companies to raise cash balances and an unprecedented build-up of household savings - has not fed higher inflation yet and deflation fears still dominate. The central banks may have more work to do unless the world economy returns to pre-pandemic levels soon.
Chart by Ritvik Carvalho and commentary by Mike Dolan.
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