True believers in the return of global inflation have started 2020 with renewed hope, and the scorn that goes with it.

Successive years of paltry price growth, depressed by powerful phenomena from demographic shifts to globalization and technological change, haven’t yet killed the anticipation that the tide will finally turn. When it does, such prophets foretell, central banks will be caught unawares.

Ken Griffin, founder of $30 billion hedge fund Citadel, delivered the latest warning last week, telling the Economic Club of New York that there is “absolutely no preparedness for an inflationary environment” in the U.S.

He’s not alone. Ethan Harris, head of global economic research at BofA Securities Inc., wrote a note in January entitled “Inflation: Talk of Death Greatly Exaggerated” that cautioned against complacency bred by past “false dawns.” Algebris Investments fund manager Alberto Gallo wondered aloud if U.S. or U.K. officials might make a “policy mistake” by keeping monetary policy too loose.

That narrative suggests resurgent inflation spilling over from tight labor markets could leave policy makers scrambling to reverse their ultra-low interest rates and unwind their bond-buying programs.

“If the labor market begins to put ever greater pressure on wages, and supply chains get broken, and productivity slips and you start to see inflation, we have a long way to go for the central banks to correct their monetary policy,” Barclays Plc Chief Executive Officer Jes Staley said in a recent Bloomberg Television interview.

Investors don’t yet see it that way. The bond market’s gauge of inflation expectations, U.S. 10-year breakevens, has had difficulty holding above 2% since early 2019, and is now around 1.66%.

While that’s up from the lows of 2019, it’s still too weak for Federal Reserve officials. Even January’s stronger-than-expected jobs growth gave them to no reason to expect steeper price gains.

“Unless and until we see those low unemployment rates putting excessive upward pressure on inflation, we’re not prepared to say we’re necessarily at full employment,” Fed Vice Chair Richard Clarida told Bloomberg Television on Jan. 31.

If anything, Fed officials are more worried that prices will be persistently low. They’re currently reviewing their policy framework, and one idea floating around is a “make-up strategy” in which inflation is allowed to run above the 2% goal for a while to compensate for having fallen short.

Allianz Global Investors fund manager Lucy Macdonald said last month that Britain’s “extremely tight” labor market -- and the prospect of a bumper budget -- stands out as a particularly promising candidate for faster inflation. Yet the Bank of England is unconvinced, with policy makers spending time at their Jan. 30 decision fretting that price pressures are suddenly worryingly weak.

That chimes with the pervading view among Group of Seven central bankers. Average consumer-price gains across the G-7 remained below 2% all through 2019, according to the OECD. It’s confounding for policy makers, who’ve long believed that inflation and employment have an inverse relationship known as the Phillips curve. Tight labor markets, as they currently are, should lift wages and prices.

The European Central Bank renewed its stimulus push last year but, as of last week, President Christine Lagarde was still describing the price outlook as “subdued.”

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