Western advanced economies are dealing with a period of above-target inflation which central banks expect to be transitory. However, for a while Fathom has been pointing out that households have built up vast savings during the pandemic, which if unleashed would push up aggregate demand and create further upward pressure on inflation. Even if those savings remain unspent, there are still clear upside risks to the inflation outlook. One of those risks is the de-anchoring of inflation expectations.

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