When costs began to take off in a number of nations world wide about two years in the past, the phrase most frequently related to inflation was “transitory.” At present, the phrase is “persistence.”

That was uttered repeatedly on the tenth annual convention of the European Central Financial institution this week in Sintra, Portugal.

“It’s been shocking that inflation has been this persistent,” Jerome H. Powell, the chair of the Federal Reserve, mentioned.

“We’ve to be as persistent as inflation is persistent,” Christine Lagarde, the president of the European Central Financial institution, mentioned.

The most recent inflation knowledge in Britain “confirmed clear indicators of persistence,” Andrew Bailey, the governor of the Financial institution of England, mentioned.

Policymakers from world wide gathered alongside lecturers and analysts to debate financial coverage as they attempt to pressure inflation down. Collectively, they despatched a single message: Rates of interest will probably be excessive for awhile.

Although inflation is slowing, home value pressures stay robust in the US and Europe. On Friday, knowledge confirmed the inflation within the eurozone slowed to five.5 %, however core inflation, a measure of home value will increase, rose. The problem for policymakers is meet their targets of two % inflation, with out overdoing it and pushing their economies into recessions.

It’s laborious to guage when a turning level has been reached and policymakers have accomplished sufficient, mentioned Clare Lombardelli, the chief economist on the Group for Financial Cooperation and Improvement and former chief financial adviser within the British Treasury. “We don’t but know. We’re nonetheless seeing core inflation rising.”

The tone of the convention was set on Monday night time by Gita Gopinath, the primary deputy managing director of the Worldwide Financial Fund. In her speech, she mentioned there was an “uncomfortable fact” that policymakers wanted to listen to. “Inflation is taking too lengthy to get again to focus on.”

And so, she mentioned, rates of interest ought to be at ranges that limit the financial system till core inflation is on a downward path. However Ms. Gopinath had one other unsettling message to share: The world will in all probability face extra shocks, extra steadily.

“There’s a substantial danger that the extra risky provide shocks of the pandemic period will persist,” she mentioned. International locations slicing world provide chains to shift manufacturing residence or to current commerce companions would increase manufacturing prices. And they’d be extra weak to future shocks as a result of their concentrated manufacturing would give them much less flexibility.

The conversations in Sintra stored coming again to all of the issues economists don’t know, and the listing was lengthy: Inflation expectations are laborious to decipher; power markets are opaque; the velocity that financial coverage impacts the financial system appears to be slowing; and there’s little steering on how individuals and firms will react to giant successive financial shocks.

There have been additionally loads of mea culpas in regards to the inaccuracy of previous inflation forecasts.

“Our understanding of inflation expectations isn’t a exact one,” Mr. Powell mentioned. “The longer inflation stays excessive, the extra danger there may be that inflation will turn into entrenched within the financial system. So the passage of time isn’t our pal right here.”

In the meantime, there are indicators that the impression of excessive rates of interest will take longer to be felt within the financial system than they used to. In Britain, the overwhelming majority of mortgages have charges which might be fastened for brief durations and so reset each two or 5 years. A decade in the past, it was extra widespread to have mortgages that fluctuated with rates of interest, so householders felt the impression of upper rates of interest immediately. Due to this transformation, “historical past isn’t going to be an important information,” Mr. Bailey mentioned.

One other poor information has been costs in power markets. The value of wholesale power has been the driving pressure behind headline inflation charges, however fast value modifications have helped make inflation forecasts inaccurate. A panel session on power markets strengthened economists’ issues about how inadequately knowledgeable they’re on one thing that’s closely influencing inflation, due to a scarcity of transparency within the trade. A chart on the mega-profits of commodity-trading homes final 12 months left many within the room wide-eyed.

Economists have been writing new financial fashions, attempting to reply shortly to the truth that central banks have persistently underestimated inflation. However to some extent the harm has already been accomplished, and amongst some policymakers there’s a rising lack of belief within the forecasts.

The truth that central bankers within the eurozone have agreed to be “knowledge dependent” — making coverage choices based mostly on the info obtainable at every assembly, and never take predetermined actions — exhibits that “we don’t belief fashions sufficient now to base our determination, not less than largely, on the fashions,” mentioned Pierre Wunsch, a member of the E.C.B.’s Governing Council and the pinnacle of Belgium’s central financial institution. “And that’s as a result of we now have been shocked for a 12 months and a half.”

Given all that central bankers have no idea, the dominant temper on the convention was the necessity for a troublesome stance on inflation, with greater rates of interest for longer. However not everybody agreed.

Some argued that previous charge will increase could be sufficient to convey down inflation, and additional will increase would inflict pointless ache on companies and households. However central bankers may really feel compelled to behave extra aggressively to keep off assaults on their popularity and credibility, a vocal minority argued.

“The chances are that they’ve already accomplished an excessive amount of,” mentioned Erik Nielsen, an economist at UniCredit, mentioned of the European Central Financial institution. That is in all probability occurring due to the diminishing religion in forecasts, he mentioned, which is placing the give attention to previous inflation knowledge.

“That’s like driving a automotive and someone painted your entrance display screen so you’ll be able to’t look ahead,” he mentioned. “You may solely look by way of the again window to see what inflation was final month. That in all probability ends with you within the ditch.”