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Inflation waves

Is inflation under control? What has been the dynamic between official rates and cpi in the past? The chart below shows what happened the last time the US had a period of high inflation, during the 70’s. When the first wave kicked in, the fed started hiking and was able to reduce inflation. However, after the series of initial hikes, the economy slowed down and they had to cut, creating the second wave, which took inflation to new highs. And it was the third wave that required going through the painful period of hiking rates to double digits to break the back of inflation. History doesn’t need to repeat itself, but the inflation we are seeing today has been created over 14 years of money printing; therefore it may require time (and more hikes) to fully have it under control.

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