This research note mainly attributes the outbreak of inflation in many economies to central bank mistakes. The authors make a convincing case that stimulative monetary policy during the global COVID-19 pandemic contributed materially to the inflation surge that followed and which persists today. Equally important, they focus intensively on the various reasons that might have contributed to this tragic policy error. 

Co-authored by a former Governor of the Reserve Bank of New Zealand and a Senior Research Fellow at The New Zealand Initiative, the paper argues that central banks overall:

• were too confident about their monetary policy framework;
• were too confident about their models;
• were too confident they could control output and employment;
• lost their focus on price stability and took on too many mandates;
• faced conflicts in some cases with conflicting ‘dual mandate’ objectives; and
• were distracted by extraneous political objectives, such as climate change.