“Yes.” This is our response when asked whether this year’s inflation rise will prove transitory or lasting. A surge in global goods demand accompanied by COVID-19-related disruptions in supply chains and labor markets has pushed core inflation to multi-decade highs this year. These are unlikely to persist, however, as goods demand is now moderating and COVID drags are waning. By contrast, robust fundamentals (healthy private sector balance sheets; pentup consumer demand and labor supply; and growth-oriented fiscal and monetary policies) point to above-potential global growth that will absorb remaining slack next year. Alongside only limited normalization in central bank accommodation, the stage is set for global inflation to rise more than 0.5%-pt  above its average over the past expansion even after pandemic recovery dynamics

fade.