Jongrim Ha, M. Ayhan Kose, Franziska Ohnsorge 17 August 2021
Policymakers would like inflation to be neither too high nor too low for obvious reasons. Low and stable inflation has generally been associated with faster growth and more stable output and employment whereas both very low and very high inflation have been associated with macroeconomic challenges (Schmidt 2021, Fell et al. 2021, Gersbach 2021).
Over the past 18 months, global inflation has displayed highly volatile movements (Ha et al. 2021a). During the pandemic-induced global recession of 2020, it registered the most muted and shortest-lived decline of any of the five global recessions over the past half-century. It then recorded the fastest increase since May 2020. The recent volatility