Investor attention has recently been fixated on the spike in headline inflation, led by the US, where the Consumer Prices Index (CPI) has accelerated to 5% from near zero over the past year. Meanwhile, UK CPI has just risen above 2% and the Bank of England expects a move beyond 3% in the months ahead.
While most market participants and policymakers expect inflation to be simply transitory, we believe subdued long-term inflation expectations may be underestimating the potential impact of $30trn (...
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