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VoxTalks Economics

S7 Ep16: Monetary policy responses to inflation

Mar 28, 2024
Bill English, editor of the ebook, discusses how central banks responded to post-pandemic inflation. Topics include contrasting approaches of emerging vs. advanced economies, forecasting inflation during supply shocks, and tools used by central banks like interest rates and asset purchases. Lessons for policymakers in dealing with future inflation challenges are emphasized.
24:10

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

  • Central banks learned that looking through supply shocks without policy adjustments is not viable long-term.
  • During the post-pandemic inflation surge, central banks predominantly relied on interest rates as the primary tool for inflation management.

Deep dives

Lesson 1: Improving Inflation Forecasting

Forecasting inflation post-pandemic was challenging due to unprecedented global shocks. Nonlinearity in the Phillips curve and the interaction between supply shocks and slack emerged as crucial factors. New data and methods focusing on price change frequency have been identified for more accurate inflation predictions.

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