Inflation concerns have entered the mainstream; a bit of a shame, since I quite enjoyed being out of consensus. Now there is growing agreement that inflation will most likely move to healthier levels as the economy reopens; more interestingly, the risk of a sharper surge in inflation has become the topic of a heated public debate.

Recovery already set to accelerate

To judge the potential impact of the fiscal stimulus, we need to factor in the economy’s momentum — not just how far we are from full potential, but in what direction we are moving and how fast. And most indicators still suggest the economy is recovering at a robust pace, much faster than after the global financial crisis (GFC).

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