Who has won the inflation debate - Team Transitory or Team Permanent?

The rift between those who said inflation was transient and those who thought it permanent partly reflected differences over what caused prices to rise in the first place

When inflation started to spike in 2021, many policymakers and economists dismissed the problem as transient. According to “Team Transitory”, central banks did not need to slow economic activity by raising interest rates aggressively because price pressures would soon subside as Covid-19 disruptions dissipated. Others disagreed. Excessive government fiscal stimulus and central bank bond-buying programmes risked permanently raising inflation, they said. According to “Team Permanent”, central banks needed to raise rates sharply.

The rift between those who said inflation was transient and those who thought it permanent partly reflected differences over what caused prices to rise in