Is there still hope that inflation will disappear on its own?
Evidently, c entral banks still harbour hope that inflation will disappear on its own, as they do not currently envisage raising interest rates to a level that would have a significant impact on inflation. Is this hope of inflation disappearing spontaneously reasonable? We do not believe so , for the following reasons: If inflation remains high for long enough, wages will re-index to prices; The initial causes of inflation (shift in the structure of demand, sanctions against Russia, effects of the energy transition) are long-lasting; Demand for commodities is currently weakened by the COVID wave in China. After this wave, the Chinese authorities will stimulate the economy strongly to try to achieve their growth targets; Commodity producers have learned to extract monopoly rents. If it turns out that inflation does not disappear on its own, central banks will be forced to act much more vigorously .