Adriana D Kugler: The global fight against inflation

Charts and figures accompanying the speech 

Thank you, Isabel, and thank you for the opportunity to speak here at the ECB today. I am particularly pleased to be part of this year's conference because the theme you have chosen has, for some time now, also been a theme of my career as an academic and public servant. Every day, of course, central bankers must bridge science and practice, drawing on the insights that research provides, specifically, because the economy and the world are continuously subject to new circumstances. We must do so, and put those insights into practice, because everyone in the United States, and in Europe, and around the world, depends on a healthy and growing economy, and depends on policymakers making the right decisions to help keep it that way.

But well before I came to the Federal Reserve, I was also bridging science and practice. First, as a labor economist, when, for example, I was exploring how employment, productivity, and earnings are influenced not only by educational attainment and experience, but also by policies. Later, as chief economist at the Department of Labor, I brought science to bear in carrying out its mission of supporting workers. As the U.S. representative at the World Bank, economic science was likewise crucial in deciding how to best direct the institution's resources to where they were needed the most. In each of these roles, I have learned a bit more about the need to balance rigorous scientific understanding of the problems that people face with the real-world experiences of those people, which sometimes do not fit so neatly into an economic theorem or principle.

Most recently, my colleagues and I on the Federal Open Market Committee (FOMC) have been focused on the very practical task of reducing inflation while keeping employment at its maximum level. To understand the recent experience of high inflation in the United States, it is helpful to consider how inflation behaved around the world after the advent of the COVID-19 pandemic. In the remainder of my remarks, I will discuss the global dimensions of the recent bout of high inflation in different economies, both comparing similarities and contrasting differences, with a special emphasis on the factors that enabled the United States to achieve disinflation while having stronger economic activity relative to its peers. I will then conclude with some comments on the U.S. economic outlook and the implications for monetary policy.