Daiwa Capital Markets list supply-chain bottlenecks, tight labour markets, ultra-easy monetary and fiscal policies as likely to keep US inflation its highest since 1991.

The comments are contained in a Wall Street Journal report on economist survey expectations for US CPI in the months ahead, in brief:

  • Economists on average see inflation at 5.25% in December, just slightly less than the rate that has prevailed since June. Assuming a similar level in October and November, that would mark the longest inflation has been above 5% since early 1991.
  • will drop to 3.4% by June of next year, then 2.6% by the end of 2022

I posted earlier on comments from Bank of England Governor Bailey on what would happen if inflation, and inflation expectations, stay high:

  • "Monetary policy cannot solve supply-side problems - but it will have to act and must do so if we see a risk, particularly to medium-term inflation and to medium-term inflation expectations"

This is correct, just as central bankers can't pump more oil (or gas!) if its flow-on effects of higher energy prices boosting inflation. Nevertheless, persistent inflation will, at some stage, prompt a monetary policy response (assuming it remains persistent).

Wall Street Journal report is here for more.