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Inflation is a global problem

Inflation is a global problem

Resilient economic growth, sticky inflation driven by higher energy prices and continued geopolitical uncertainty are complicating the path back to central-bank price targets. We believe policymakers are likely to adopt a tightening bias but remain data dependent.


Inflation has dominated headlines since Covid, amplified more recently by higher oil prices and uncertainty surrounding the conflict with Iran. And it’s not a problem unique to the U.S. Since the pandemic, inflation across many global economies has remained persistently above historical norms — highlighting the resilience of underlying cost dynamics.

This stickiness makes it more difficult for central banks to bring inflation back toward the widely targeted 2% level in the near term. As a result, policymakers are likely to remain highly data dependent, particularly as geopolitical uncertainty continues. We would not be surprised if the outlook for central bank policy around the world shifts toward a more restrictive stance, with the possibility of further tightening if inflation proves more persistent.

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Is AI productivity hiding in the data?
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Sticky inflation and resilient growth have revived monetary tightening, increasing the risk of higher-for-longer rates and near-term volatility. We continue to believe economic resilience and strong corporate profits should continue to provide a favorable backdrop for stocks, and would use periods of market weakness to add selectively to equities. Additionally, owning real assets can help hedge against inflation.

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