Stagflation
The nasty combination of high inflation, weak growth and rising unemployment at the same time.
In plain English
The nasty combination of high inflation, weak growth and rising unemployment at the same time.
Stagflation is stagnation plus inflation: the economy stalls while prices keep rising. It is a central banker's nightmare, because the usual cures conflict. Raise rates to fight inflation and you crush growth further; cut rates to help growth and inflation gets worse.
The 1970s oil shocks are the classic example. Mentions of stagflation spike whenever energy prices jump while growth is already slowing, and traders brace for volatile, unpredictable policy.
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