Stagflation
What is Stagflation?
High inflation combined with slow growth and high unemployment.
Understanding Stagflation
Stagflation is an unusual and painful mix: prices rise quickly while the economy stagnates and joblessness is high. The term became common during the 1970s, when oil price shocks hit many economies.
It is hard to treat because the usual tools conflict. Raising interest rates fights inflation but can deepen the slowdown; cutting rates supports growth but can worsen inflation.