Jerome Powell’s Dilemma: What if the Drivers of Inflation Are Here to Stay?

Central bankers worry that the recent surge in inflation may represent not a temporary phenomenon but a transition to a new, lasting reality.

To counter the impact of a decline in global commerce and persistent shortages of labor, commodities and energy, central bankers might lift interest rates higher and for longer than in recent decades—which could result in weaker economic growth, higher unemployment and more frequent recessions.