Diane Swonk: Inflation shocks are becoming normal and destabilizing

Diane Swonk: Inflation shocks are becoming normal and destabilizing
Inflation shocks now norm, impact widens

Diane Swonk warns that economic shocks are increasingly becoming the norm, with inflation lingering for more than five years.

She observes that rising prices are affecting both prices and demand, except in data centers and among affluent consumers, and describes the situation as corrosive and destabilizing.

Swonk has previously noted that the Atlanta Fed’s Taylor Rule suggests current policy rates may be too low to achieve 2% inflation, according to her recent comments. She also highlighted that declining trust, rather than data alone, contributed to a recent bond market rout and poses a challenge for the new Fed chair, as detailed in another analysis. These observations provide further context for her warning on persistent economic shocks.

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