NAfter decades of low and stable inflation, the United States and Europe experienced a surge in inflation in 2021 to 2023 during and after the Covid pandemic, driving inflation to 9.1 percent in America and 10.6 percent in the euro area. For most people this was completely unexpected. For Americans and Europeans younger than 45, it was a completely new experience. Most economists were also surprised by the development. They had become accustomed to what seemed to be the new normal of very low interest rates and low inflation.
The American Federal Reserve and the European Central Bank (ECB) admitted that they initially underestimated the price surge, but then responded with drastic and rapid interest rate increases. The inflation rate has recently fallen significantly in both economic areas. Is the haunting over before it really begins?
#real #inflation
