Harvard Professor, economist, and former Treasury Secretary Larry Summers said on Bloomberg’s Wall Street Week that inflation will not drop to normal levels, “without a significant increase in unemployment of perhaps 2 percentage points or more at some point down the road.”

Summers said, “I still think that the Fed and most market participants are underestimating the gravity of our situation. The Fed moved its forecast by an epic amount, both up on inflation and down on the economy. But their current view that they’re going to get to 2.5% inflation or below with unemployment just above 4 strikes me as an optimistic tail outcome, not a central tendency in a forecast. I think a better judgment is that there’s no reduction to normality without a significant increase in unemployment of perhaps 2 percentage points or more at some point down the road. And that’s why I think there’s a significant chance that we’re going to find ourselves in a stagflationary situation where inflation comes down, but not all the way to desired levels and the economy is much weaker than anything that’s contemplated in the Fed’s forecast.”

Some however have noted as supply chain disruptions work themselves out and China comes out of lockdown, supply of consumer goods will increase, and that supply is a key underlying fundamental driving the increase in prices – which could revert quite quickly. Additionally, at any point Russia could declare its objectives met in Ukraine, which would lower the price of oil dramatically, and change another fundamental driving the increase in prices.

In short a lot can change in three months.