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 investor confidence in central banks' ability to return inflation to target has eroded to historic lows. The piece reflects on the early 2020s, when inflation surged and central banks raised interest rates, sparking debates about 'hard' versus 'soft' landings for the economy. The author argues that investors have now 'learned to live with inflation,' adjusting portfolios and expectations accordingly, as the likelihood of a perfect soft landing diminishes. The analysis suggests a fundamental shift in market psychology, where inflation is no longer seen as a temporary anomaly but a structural feature of the economic landscape.