Will there be a shift to a “monetary dominance” regime?

Since the subprime crisis, OECD countries have been in a “fiscal dominance” regime: governments have pursued very expansionary fiscal policies, and central banks have ensured public debt sustainability by conducting highly expansionary monetary policies that have kept long-term interest rates well below the growth rate. This policy is not directly responsible for inflation, which is mainly due to rising commodity prices caused by the shift in the structure of demand from services to goods following the COVID crisis and the war in Ukraine. But even if this policy is not responsible for inflation, the appearance of high inflation can lead to a change of regime, from “fiscal dominance” to “monetary dominance”: a regime where monetary policy becomes more restrictive and constrains fiscal policy, which can no longer be as expansionary as governments would like. In this regime, the central bank dominates governments, whereas with fiscal dominance governments dominate the central bank. But do we believe that such a change of regime is possible today?