I have been writing, indeed many times, about the challenge of allocating responsibility for the sharp and persistent increase in inflation to supply- and demand-driven forces. Their relative roles are relevant to—indeed, effectively determine—what monetary policy can and cannot achieve and, therefore, are relevant to what the appropriate monetary policy response is. Here I focus on core inflation. The supply shocks arising from the war in Ukraine raised headline inflation even further, but we are familiar with those.
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