Will lower unemployment generate inflation sustainably above 2%?

Markets have consistently overestimated the necessary degree of central bank monetary tightening over the last 25 years. This great chart from DWS shows the changing tradeoff between Inflation measured by Personal Consumption Expenditure (PCE) and unemployment in the US.

Will lower unemployment generate inflation sustainably above 2%?

Higher inflation pre 1994 was influenced by commodity supply price shocks of the 70s, or labour price shocks of the 80s...and was all before the emergence of deflationary effects from China. Simply returning to the pre Covid-19 policies and tradeoffs wont generate high inflation.

https://www.linkedin.com/feed/update/urn:li:activity:6776631994412609536

Source: Darling Macro, DWS. For wholesale investors only.