How inflation comes down

Supply shocks fade on their own; policy decides whether expectations and demand let them.

• Macro and rates

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  Did rate hikes bring inflation down, or did the shocks fade? The careful answer is both

  Supply shocks faded on their own; the hikes anchored expectations so the fading could happen. Credit both, in that order.

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  From The contribution of monetary policy to disinflation · Pongpitch Amatyakul, Fiorella De Fiore, Marco Lombardi, Benoit Mojon and Daniel Rees, Bank for International Settlements (BIS Bulletin No 82)