7 Jun, 2021

Surge in commodity prices bring inflation fears

More of the same inflation drum beat that we need to watch. I still think the current spike is temporary due to the novel shutdowns of the world’s economies due to the pandemic. Once things normalize (whatever that looks like) sometime in 2022 I expect inflation in the U.S. to return to pre-pandemic levels.

Many factors are driving the increases, including ultra-strong consumer demand and supply-chain bottlenecks. But behind many of them, many economists say, is a deliberate decision by policy makers in the U.S. and elsewhere to run their economies hot for now, with lots of stimulus, to ensure they recover fully from damage caused by Covid-19.

Central bankers must decide whether they can keep looking past commodity-price increases, along with other signs of higher inflation, or must move faster to cool demand through rate rises or other moves. In the 1970s, many countries gave priority to jobs and growth over controlling consumer prices during a series of oil shocks, and experienced high inflation.

Wall Street Journal

About : Kevin Bae

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