New Inflation Poses Not So New Budget Risk
Persistent high inflation presents federal and state policymakers with an economic problem not seen in roughly four decades. In fact, during much of the past 15-year period, inflation not only was subdued, it consistently ran below the Federal Reserve’s (the Fed’s) target of 2 percent. Chronically below-target inflation eventually prompted the Fed in August 2020 to adjust its policy framework to combat this tendency. Not long after, however, in the wake of the COVID-19 pandemic, inflation trends and the Fed’s orientation to them began to reverse. Once it emerged, inflation accelerated th...
Source: ca.gov