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The Global Week Ahead: What if Inflation is Just Getting Started?
What if central banks never succeed in terms of reining in longer wave drivers of inflation and that structural drivers are being unleashed that could invoke profound longer term behavioural adjustments? Some of this view is why even the most preferred market-based measures of longer run inflation expectations like the Fed’s 5y5y measure are significantly above 2% (chart 1). This is occurring simultaneously to pricing fairly aggressive rate hikes. The market is signalling that central banks will struggle to get the genie back in the bottle for quite a period of time. chart Markets are, of course, not always ... (full story)