ABSTRACT

Is High Inflation a Risk in 2021? [April 6, 2021]   [open pdf - 776KB]

From the Document: "Assuming public health continues to improve, many economists project rapid economic growth in 2021. The unprecedented fiscal [hyperlink] and monetary [hyperlink] stimulus in response to the COVID-19 [coronavirus disease 2019] pandemic is also expected to continue in 2021. Some observers have questioned whether the combination of stimulus and rapid growth will result in rising prices [hyperlink]. [...] The economy experienced persistently high inflation in the 1970s and early 1980s [hyperlink], last reaching double-digits in 1981. Most economists believe this high inflation was caused by overly expansionary monetary and fiscal policies, along with significant increases in energy prices. Additionally, as expectations of higher inflation became incorporated into consumer and business decisions, these expectations contributed to actual increases in inflation. The Federal Reserve (Fed) raised short-term interest rates significantly in the early 1980s, which successfully brought inflation down quickly, though at the cost of a recession."

Report Number:
CRS Insight, IN11644
Author:
Publisher:
Date:
2021-04-06
Series:
Copyright:
Public Domain
Retrieved From:
Congressional Research Service: https://crsreports.congress.gov/
Format:
pdf
Media Type:
application/pdf
URL:
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