As Fed issues rate hike, more warnings that stagflation is coming to North America – By Don Pittis (CBC News) / May 5, 2022
‘Never again,’ said economists decades ago. But inflation plus stagnation may be on the way
Like a boogeyman to scare children, stagflation is rolled out every now and again by economic prognosticators to warn of how awful things can get if we’re bad. Perhaps that’s why many economists don’t seem to be taking the threat seriously.
Similar to the response after warnings of inflation in 2020, most financial commentators have been saying that the threat of stagflation — an unusual combination of a stagnant economy and steady inflation — is small.
But U.S. Federal Reserve Chair Jerome Powell did not seem as confident this week as he has been in the past.
“I think we have a good chance to restore price stability without a recession, without, you know, a severe downturn,” Powell told a news conference on Wednesday.
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