Economy & Business

The Inflation Puzzle

How Central Banks Lost Control of Inflation — and What It Means for the Global Economy

Olivier Blanchard

Senior fellow at the Peterson Institute for International Economics and former chief economist of the IMF, specializing in macroeconomics and monetary policy.

February 23, 2026·7 min read

The Inflation Puzzle

After decades of low inflation, the global economy experienced a surge in inflation in 2021-2022 that caught central banks off guard. The episode revealed the limits of central bank models and the complexity of inflation dynamics. Understanding what happened — and what it means for monetary policy — is one of the most important questions in contemporary economics.

TOPICS

inflationcentral bankingmonetary policyeconomicsFederal Reserve

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