CB inflation bias: CBs systematically under-tighten during bubbles when inflation is low and growth is strong, because the productivity boom narrative is compelling. This is the key mechanism by which central banks amplify rather than dampen cycles.
CB inflation bias: CBs systematically under-tighten during bubbles when inflation is low and growth is strong, because the productivity boom narrative is compelling. This is the key mechanism by which central banks amplify rather than dampen cycles.