Post by account_disabled on Feb 22, 2024 19:46:51 GMT 10
Inflation only returned to pre-shock levels after a year in 12 of the 111 inflationary episodes the IMF examined, and in most of those cases it only occurred because of a massive economic shock like the 2007-08 financial crisis. or the Asian crisis. financial crisis of 1997-98. In other words, they were not examples of “immaculate disinflation.” In 47 episodes examined, inflation had not yet returned to normal after five years, and overall the average time it took for inflation to return to pre-shock levels was three years. Fact 2 Most unresolved inflation episodes involved “premature celebrations” This argument seems particularly relevant today. In almost all cases of persistent inflationary shocks, inflation fell “materially” in the first three years, then stabilized at a high level or accelerated again.
Easing of monetary policy or governments loosening the strings too soon. Fact 3 Countries that defeated inflation had tighter monetary policy One of the IMF's main conclusions was that the successful Pakistan Phone Number resolution of inflationary shocks tended to occur when central banks raised interest rates to combat them, whatever their cause: The difference in monetary policy tightening between countries that resolved inflation and those that did not is statistically significant, quantitatively large, and establishes consistently across different measures of stance. On average, countries that resolved inflation increased their short-term real effective interest rate by about 1 percentage point compared to the pre-shock stance.
While the real rate in countries that did not resolve inflation was 4.5 percentage points lower on average compared to the pre-shock posture. -shock. Fact 4 The countries that solved inflation STILL LIKE THIS The corollary of facts 2 and 3 is that successful inflation struggles generally occurred when central banks raised interest rates and kept them high longer (plus governments had restrictive fiscal policies). Oh oh. Fact 5 Countries that resolved inflation SUFFERED LIMITED exchange rate depreciation Another [annoyed grunt] point, to be honest. Countries that managed to reduce inflation (through higher interest rates for longer) were able to keep their exchange rates fixed or limit the depreciation of their currency.
Easing of monetary policy or governments loosening the strings too soon. Fact 3 Countries that defeated inflation had tighter monetary policy One of the IMF's main conclusions was that the successful Pakistan Phone Number resolution of inflationary shocks tended to occur when central banks raised interest rates to combat them, whatever their cause: The difference in monetary policy tightening between countries that resolved inflation and those that did not is statistically significant, quantitatively large, and establishes consistently across different measures of stance. On average, countries that resolved inflation increased their short-term real effective interest rate by about 1 percentage point compared to the pre-shock stance.
While the real rate in countries that did not resolve inflation was 4.5 percentage points lower on average compared to the pre-shock posture. -shock. Fact 4 The countries that solved inflation STILL LIKE THIS The corollary of facts 2 and 3 is that successful inflation struggles generally occurred when central banks raised interest rates and kept them high longer (plus governments had restrictive fiscal policies). Oh oh. Fact 5 Countries that resolved inflation SUFFERED LIMITED exchange rate depreciation Another [annoyed grunt] point, to be honest. Countries that managed to reduce inflation (through higher interest rates for longer) were able to keep their exchange rates fixed or limit the depreciation of their currency.