Why inflation fell without a recession

Monetary tightening is supposed to slow growth, and in the 1980s it quelled inflation only after deep downturns. The apparent lack of damage today has led to the revival of a dangerous myth: that inflation would have gone away by itself. Paul Krugman of the New York Times has even claimed that Jerome Powell, the Fed’s chair, used his speech at Jackson Hole to attribute inflation “largely to transitory pandemic effects”, resurrecting an old narrative that central bankers dumped in 2021.