Whether you are an uphiller or a downhiller depends mainly on your assessment of three current issues: the labour market, the surge in inflation, and the risk of not being able to recover quickly in the event of a policy mistake.

Other central bankers around the world may be tempted to think that they are simply spectators in all this. They are not

The big labour market puzzle is that, despite massive demand, the labour market is unable to match unemployed workers to jobs. The situation is particularly stark in the US. While the Job Openings and Labor Turnover Survey data for April (the most recent available) show that there are a record number of job openings in the US – more than 9 million – labour-force participation remains stubbornly low, and unemployment high, compared to pre-pandemic levels.

To explain this gap, some point to temporary and reversible factors such as school closures, enhanced unemployment insurance benefits,…

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