How to fight inflation? (Spoiler alert: not with interest rate rises) | Joseph Stiglitz
US inflation is mainly supply-side driven so further rate hikes will have little to no effect – and cause deep problems of their ownDespite favourable indices, it is too soon to tell whether inflation has been tamed. Nonetheless, two clear lessons have emerged from the recent price surge.First, economists’ standard models – especially the dominant one that assumes the economy always to be in equilibrium – were effectively useless. And, second, those who confidently asserted it would take five years of pain to wring inflation out of the system have already been refuted. Inflation has fallen dramatically, with the December 2022 seasonally adjusted consumer prices index coming in just 1% above that for June.
