Inflationary Interest

Since the inflation we are experiencing appears likely to linger somewhat longer, calling it transitory may no longer be justified. Rather, what about ephemeral? Expansionary monetary policy is coming to an end and will become contractionary by late 2022. Similarly, fiscal policy has become contractionary, and starting in 21Q2, began reducing GDP by 2.5%/annum, the most contractionary stance in decades. The contractionary trajectory extends into the foreseeable future.