Is inflation on the rise? Here’s what the experts are saying…
- While the outlook for economic growth is strong on several fronts, the key question now is: What are the risks? For instance, what does that economic backdrop mean for inflation, and how will the Fed respond to inflation if and when it returns? …For now, expect the Fed to look through price inflation in the first half of 2021, and look more closely at how persistent it is, or is not, in the second half of this year and into 2022. We continue to believe that U.S. growth is assured for 2021 and beyond—but inflation remains a key risk. Read more… – Chris Watling, Longview Economics
- Later this year, we may see a more economically significant rise in inflation as consumers switch their consumption preferences from goods to services and businesses attempt to return to their former capacities in the face of sharply rising demand. This could cause some relative price shifts in the near term, but, again, nothing that will trigger the Fed into action on rates or asset purchases. As capacity is restored, supply should catch up to demand, forestalling a genuine inflationary spiral. Read more… – Brian Nick, Chief Investment Strategist, Nuveen
- The Fed made an important change to its approach last year to help anchor inflation expectations. It changed its inflation target from specifically 2% to an average of 2% over time. …The new approach seems tailor-made for a situation that we expect lies just ahead, in the second quarter of 2021 and beyond. …The new average inflation target gives the Fed a buffer to hold rates steady until it’s confident that inflation will remain persistently around 2%. Read More… – Andrew Patterson, Vanguard Senior Economist
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Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, asset class, or investment strategy (including the investments and/or investment strategies recommended by the adviser), will be profitable or equal to past performance levels. Information in this commentary is gleaned from third party sources, and while believed to be reliable, is not independently verified.