Fed Hopes for 'Immaculate Disinflation' as Inflation Cools Without Recession, But Final Push May Require Some Job Losses
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Inflation slowed in 2022 without a recession, giving hope the Fed can tame prices without large job losses ("immaculate disinflation").
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The term implies reducing inflation without big unemployment would be miraculous, as history suggests recessions are needed to curb high inflation.
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By summer 2023 inflation was falling quickly and the economy remained solid, but economists avoided declaring victory.
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Getting the last bit of inflation down could prove more difficult than the cool-down so far.
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The Fed is increasingly hopeful for a gentle landing, but some labor market pain may be needed to get full disinflation.