The writer, a faculty member at Yale University and former Morgan Stanley Asia chair, is the author of ‘Unbalanced’

Back in the early 1970s, when I was a pup, my colleagues and I on the staff of the US Federal Reserve Board, analysed inflation from the cost-push or supply side. Global economic growth had unleashed a surge in commodity prices, reinforced by a quadrupling of oil prices after the 1973 Arab-Israeli Yom Kippur war. With labour markets already tight, productivity weakening, and US regulatory costs mounting, a wage-price spiral soon ensued. A stagflationary decade of double-digit inflation and slow growth followed. Financial market performance was atrocious.

Of course, that could never happen again, right? Central bankers insist that inflation expectations are anchored. The horror movie of the early 1970s is also running in reverse. Oil prices have collapsed, so too those of other commodities, and soaring un-employment has killed any chance of wage inflation. Demand will, meanwhile, remain under pressure as social distancing keeps consumers from shopping, eating out, travelling and other leisure activities.