Vladimir Putin’s assault on Ukraine has silenced last year’s “transitory versus permanent” debate over the global rise in inflation. The economic effects of the war will be huge everywhere, and the behaviour of inflation will reflect those consequences as much as reveal who was right beforehand.

That disagreement still matters, however. Where central banks came down on the question before the war has implications for how they must think about handling its effects today if they want to be consistent.

Recall that accelerated inflation in 2021 arose from Covid-related production disruptions in global value chains, leading to relative shortages of manufacturing inputs and commodities. There can be reasonable disagreement about whether to tighten monetary policy in the face of a negative supply shock, when inflation occurs because the economy’s productive potential has been damaged. A central bank could judge that this type of inflation should be ignored if the supply shock involves a temporary adjustment in relative prices after which the price level stabilises by itself.