Why Inflation May Not Be Heading Back to 2%
Former US presidential adviser Pippa Malmgren joins Merryn Talks Money to explain why the old tools won’t work anymore.
Philippa “Pippa” Malmgren
Photographer: Chris Ratcliffe/Bloomberg
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Inflation isn’t heading back to 2%, according to Pippa Malmgren, author and former adviser to President George W. Bush. She says it’s more likely to stay around 4 to 5%. Why? Malmgren contends that it’s because the main problem facing economies today is tied to supply and demand, and that means traditional inflation-fighting tools won’t really work.
“Usually what you do, and all the textbooks say, if you raise interest rates, then inflation will come down,” Malmgren says on this week’s episode of Merryn Talks Money. “But right now we don’t have enough companies making things—whether it’s tomatoes, growing things or whether it’s computer chips,” she said.