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MNI: US Inflation Has Become More Persistent -SF Fed Paper

(MNI) Washington

Persistent factors have become more important drivers of U.S. inflation in recent months, which could call for a "stronger and longer-lasting policy response," a Federal Reserve Bank of San Francisco paper said Monday.

Using a 10-year rolling average measure, the paper found a rise in the persistence of inflation levels and inflation changes starting in mid-2019, nearly a year before the Covid-19 pandemic. By March 2022, "persistent shocks to inflation are about twice as volatile as transitory shocks," Fed economists Kevin Lansing wrote. "This result implies that persistent shocks are the more important driver of recent inflation movements."

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Persistent factors have become more important drivers of U.S. inflation in recent months, which could call for a "stronger and longer-lasting policy response," a Federal Reserve Bank of San Francisco paper said Monday.

Using a 10-year rolling average measure, the paper found a rise in the persistence of inflation levels and inflation changes starting in mid-2019, nearly a year before the Covid-19 pandemic. By March 2022, "persistent shocks to inflation are about twice as volatile as transitory shocks," Fed economists Kevin Lansing wrote. "This result implies that persistent shocks are the more important driver of recent inflation movements."

Keep reading...Show less