That Siren You Hear Is The Inflation Alarm

Like thunder after lightning, inflation follows an economic growth spurt, right? It was certainly true in the 1970s and 1980s, but the 1990s are supposed to be different. On both sides of the Atlantic, central bankers throughout the year have pledged not to let inflation show its face and touch off another boom-and-bust cycle. But now that a turnaround is sweeping through Europe, there are worrisome signs that inflation is about to make a comeback. Central bankers are caught between making good on their low-inflation promises and supporting their countries' fledgling recoveries.

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