From low to high inflation: Implications for emerging market and developing economies

CEPR Policy Insight No 115

Jongrim Ha, Ayhan Kose, Franziska Ohnsorge

The recent commodity price surge, in the wake of Russia's invasion of Ukraine, has exacerbated already elevated inflationary pressures. This CEPR Policy Insight argues that over the medium term, as recent shocks unwind, inflation is expected to ease back towards targets, but the Great Inflation of the 1970s is a reminder of the material risks to this outlook. As inflation remains elevated, the risk is growing that, to bring inflation back to target, advanced economy central banks will once again need to undertake a much more forceful policy response than currently anticipated.