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Tyler Cowen

Three Reasons Inflation Isn’t Here to Stay

The Federal Reserve’s institutional and political credibility depends on bringing inflation down — and the market is counting on it, too.   

Not getting any cheaper.

Not getting any cheaper.

Photographer: Ash Ponders/Bloomberg

With inflation reports coming in so high, it’s getting harder to defend my membership on “Team Transitory.” Yet I remain committed to the view that higher inflation is, in fact, transitory: After a few years of above-average price inflation, prices will return to a steady state of about 2% annual growth, as has mostly been the case since the early 1990s.

The case for Team Transitory is not about whether the next pending inflation numbers will come in high or low. Instead it consists of the following two propositions: