Nick Timiroas highlighted an exchange from Fed Governor Waller (link to speech/interview transcript) on Twitter. This article consists of two rants based on the transcript, plus a bonus rant in the appendix based on what somebody else said. Supply Shocks
Within the mainstream approach to which most central bankers are anchored, supply shocks can be transitory and have a permanent effect on the price level conditional on the monetary policy response. If monetary policy does not completely offset them you might achieve an equilibrium with the return of inflation to the target and price level that is higher.
"Peak Economics 101" ... that's a concept everybody needs to start talking about!
Thanks this is a good blog and timely one. I share here my reply on the issue of supply shocks and price level. (see https://twitter.com/BenignoGianluca/status/1747985782936092922)
Within the mainstream approach to which most central bankers are anchored, supply shocks can be transitory and have a permanent effect on the price level conditional on the monetary policy response. If monetary policy does not completely offset them you might achieve an equilibrium with the return of inflation to the target and price level that is higher.