A growing number of renowned minds are contemplating a perplexing economic issue - the delay in laying off workers during a recession, giving rise to a new concept termed Immaculate Disinflation. This unexpected phenomenon has confounded economic textbooks and central bankers, who have long prioritized taming inflation over preserving jobs, traditionally viewing job losses as collateral damage in the battle against rising consumer prices.
Historically, the Phillips Curve theory suggested that there was a natural rate of unemployment essential for controlling prices, with interest rate hikes used to diminish wage pressures by putting workers out of a job. However, the notion of full employment has shifted to the elusive Non Accelerating Inflation Rate of Unemployment (NAIRU), whose exact level remains uncertain despite previous assumptions. As economies navigate through uncertainties, doubts linger about whether the current environment, marked by low unemployment and subdued inflation, will persist or if another wave of price hikes looms on the horizon.