"We’re in a new regime where that trade-off between growth and inflation is even sharper" Blackrock is out with a great note today ( read it here ) that talks about the tradeoff between growth and inflation. They estimate it would take a deep recession in the US and 3 million job losses to bring inflation back to 2% quickly and it would be even worse in Europe. They say that it''s high time central bankers were upfront about it and debate the tradeoffs openly, write Jean Boivin and Alex Brazier. By focusing solely on the theoretical de-anchoring of inflation expectations and ignoring the very real growth costs, both the Fed and the ECB are swerving a crucial debate that needs to be had: where should policymakers land on the inflation|growth trade-off and what is the appropriate speed at which inflation should come back down to the 2% target? Instead, central bankers are increasingly relying on stringent, inflexible language in an effort (I think) to bluff on credibility while insisting there won''t be a hard landing. They argue that the right path for central banks is to reduce the hit to growth by taking longer to bring inflation back to target.