Is It the End of On-Target Inflation?

Introduction.

The COVID-19 pandemic imposed an unprecedented shock on the global economy, causing significant outflows of capital from emerging market economies, a sudden drop in domestic demand, and complete or at least partial closure of economic sectors. In addition to the loss of human lives, falling incomes and deep retrenchment in consumption have caused a contraction in GDP growth across advanced, emerging, and developing market economies. In other to reduce the negative shock imposed on domestic economies by COVID-19, central banks have cut interest rates…