Clarida Sees 'Flavor' of Stagflation But No Sign of a Trend

The video discusses the differences between the stagflation of the 1970s and current economic conditions. It highlights past policy mistakes and suggests that central bankers have learned from them. The speaker does not foresee stagflation as a baseline scenario but acknowledges current economic challenges, such as bottlenecks leading to modest demand increases and higher prices. Policymakers need to be vigilant as adverse supply shocks can complicate monetary policy by increasing inflation and unemployment.

What challenges do policymakers face in the current economic environment?

Why is a substantial persistent adverse supply shock concerning for central bankers?