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How Should Japan Respond to Inflation?

Though US inflation now seems to have cooled, the Federal Reserve’s slow start likely resulted in sharper interest-rate hikes than would otherwise have been needed to rein in price growth. Is the Bank of Japan making the same mistake?

TOKYO – In the fall of 2021, monetary economists in the United States were sharply divided between those who believed that high inflation would be short-lived (Team Transitory) and those who insisted it was here to stay (Team Persistent). Today, a similar clash can be seen in Japan, though there are very different considerations at play.