Monetary policy framework is the real issue, not inflation risk

Our knowledge of inflation dynamics remains limited

Masaaki Shirakawa

May 25, 2021 05:00 JST

Pedestrians on a street in Tokyo: the declining working-age population means a decline not only in labor supply but also in demand for goods and services. © Reuters

Masaaki Shirakawa is a former governor of the Bank of Japan.

Assessments of inflation risk have now taken center stage in global financial markets after the surprise jump last week in the U.S. annual consumer price inflation rate for April to 4.2%. What is at issue is whether the rise in inflation is transitory.