The Clap
While the Fed has long given up the term “Transitory Inflation,” several economists are still sticking to the narrative.
Backstory
Up until late 2021, the Fed used the word “transitory” (another word for temporary), to describe what was already then decades-high inflation. By mid-December 2021, Fed Chair Jerome Powell said it was time to retire the term “transitory” in light of “persistent inflation.”
Why this matters
Economists who remain on team transitory argue that the Fed is making a huge mistake by raising interest rates so aggressively. These economists believe that energy prices will stabilize sooner than expected, & that supply chain disruptions have already started to ease.
