How investors learned to live with inflation

This article from The Economist's Buttonwood column, published July 21, 2026, analyzes how financial markets have adapted to persistent inflation. It notes that for much of the early 2020s, investors focused on whether central bankers could achieve a 'soft landing'—cooling inflation without triggering a recession—or a 'hard landing' where tightening causes economic downturn. The key takeaway is that market confidence in central banks' ability to return inflation to target has eroded to historic lows. Investors are now learning to operate in an environment where inflation remains elevated, shifting their strategies accordingly. The piece reflects a broader sentiment shift from hoping for disinflation to accepting a new normal of higher inflation.