What should central banks do if inflation returns in the future?
The current economic equilibrium has led to a persistent situation of low inflation, low interest rates and increasing public debt. The question that then arises is what economic policy should be conducted if inflation returns in the future, for example as a result of a change in the functioning of labour markets. To prevent a public debt crisis that would lead to a drastic rise in interest rates, the only solution would be for central banks to smooth the inflation shock by letting it be transmitted to interest rates only very gradually .