The Covid-19 vaccination programmes that have started across many advanced economies, together with unprecedented monetary and fiscal stimulus, are bringing fears of an inflation surge in future.

The argument for higher inflation goes as follows: accelerated fiscal deficit spending in an environment of loose monetary policy is a recipe for higher inflation. It goes further by pointing out that the outsize fiscal stimulus globally is going directly into people’s pockets through cash transfers to households and directly into the real economy through infrastructure spending, unlike the bond buying programmes after the last financial crisis, which resulted in asset price inflation...

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