Inflation, it is often said, is a matter of too much money chasing too few goods. In many places that has been 2021 in a nutshell
INFLATION, IT IS often said, is a matter of too much money chasing too few goods. In many places that has been 2021 in a nutshell. Resurgent demand collided with insufficient supply, yielding inflation of 3% in the euro area, more than 4% in America and over 9% in Brazil. Such price pressures, together with early signs that economies would take off as lockdowns ended and more people were jabbed, led policymakers to set the course for scaling back emergency stimulus.
In America, emergency unemployment benefits lapsed on September 6th. A measure of the government’s contribution to GDP growth produced by the Brookings Institution, a think-tank, showed a staggering 7.8 percentage-point boost to the annualised growth rate in the first quarter of 2021, but a drag of 2.1 percentage points in the third. Britain’s costly furlough scheme, meanwhile, is due to end later this month.
Interest-rate increases in large advanced economies are not on the cards until late next year at the earliest. But the flow of asset purchases is slowly being turned off. The Reserve Bank of Australia began tapering its monthly asset purchases after its meeting on September 7th, and the Bank of England will soon reach its bond-purchase target of £875bn .
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