Professor Tim Congdon is a monetarist economist who served on the Treasury Panel (the so called “wise men”) during the 1990s, is the founder of Lombard St Research and more recently in the aftermath of the global financial crisis the Institute of International Monetary Research at the University of Buckingham.
Tim is well known for having warned about the dangers of rising inflation in the early days of the pandemic as central banks loosened policy significantly, and sees further increases in global inflation to come in 2022 despite some signs that money supply growth has slowed. In his interview we spoke about the persistence of recent rises in inflation, the relationship between the money supply and inflation, central banks’ and their forecasts for inflation, the usefulness of the Phillips Curve in forecasting and his views on the current degree of spare capacity.
While Tim acknowledges that base effects could pull down on inflation he also argues that there are a lot more positive base effects yet to push inflation higher in the coming months. He remains highly critical of the Federal Reserve’s loose policy (he has in the past described some members of the Fed as “complacent” in this respect), is unimpressed with its average inflation targeting policy and when combined with sizeable infrastructure spending argues US monetary policy could be an important cause of ongoing high inflation.
The interview concludes with a brief discussion about the longer-term structural aspects of inflation, including the impact that population ageing globally might be having on inflation and the potential for globalisation to continue to depress inflation as it did in the 2000s.
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