Will High Underlying Inflation Persist?

Amaze Lusompa and Sai Sattiraju

Economic Bulletin, 2023, 4

Abstract: Underlying inflation—the rate of inflation that prevails after temporary imbalances in the economy are resolved—can help policymakers gauge whether current high rates of inflation are likely to persist. Using survey-based inflation expectations, we show that if current inflation forecasts are realized, underlying inflation should decline toward 2 percent in 2024. However, if inflation continues to surprise to the upside, underlying inflation may remain elevated for some time.

Keywords: monetary policy; inflation; underlying inflation (search for similar items in EconPapers)
JEL-codes: B22 E31 E52 (search for similar items in EconPapers)
Date: 2023
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