At the Jackson Hole economic symposium last week, central bankers were under no illusion about inflation. Its threat persists, they said, and its outlook is complicated by structural shifts in the global economy. Normally, the latter argument is simple to dismiss because officials always complain that their period in office is marked by unusual uncertainty. In 2023, however, they have a point. There are five important shifts happening in the global economy right now.

The first and most immediate is a necessary policy adjustment from reducing inflation to keeping it under control. The rate of price increases has slowed sharply in the US and is moderating in Europe, but Federal Reserve chair Jay Powell and Christine Lagarde, president of the European Central Bank, were clear that it is far too early for central bankers to take a victory lap.

Domestic demand in the US is surprising everyone by its strength, which is likely to keep inflation too high if it persists when unemployment is near historic lows. While the current estimates by the Atlanta Fed that the annualised rate of growth is on track to touch 6 per cent in the third quarter are almost certainly wrong, the US economy is running too hot and needs to cool. In Europe, business is gloomy but prices — especially in holiday destinations — and wages are still rising rapidly, raising the prospect of prolonged stagflation.