Supply or Demand? Fed Tries to Pin Down What’s Driving Inflation
- SF Fed analysis suggests inflation is now more demand-driven
- Other studies show difficulty of separating inflation drivers
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Strong demand for goods and services may be starting to overtake supply constraints -- from the pandemic and the war in Ukraine -- as the driver of US prices, according to new gauges built by Federal Reserve economists.
On the face of it, that would suggest inflation is more likely to stick around even as the disruptions caused by pandemic and war fade from view, strengthening the case for tighter Fed policy to counter it.