Why inflation will be higher and more problematic

October's reading up again at 6.2%

After 40 years of declining inflation and interest rates, the direction of travel appears to be changing, due to new central bank policy priorities, China’s strategic reorientation, the energy transition, pressures in supply chains and labour’s increasing bargaining power in negotiations over the spoils of growth.

The tilt towards supply-side, cost-push inflation in this dynamic will likely pose a challenge to central banks. Uncertainty over how central banks choose to navigate a changing inflation environment will likely generate market volatility in the coming year.  We believe we are currently moving out of the early, recovery part of the business cycle into the mid-cycle phase. It is therefore a good time to ask what sort of cycle we think we will see. Five income themes for 2022 Overall, we think we could be in for a long expansion, supported by central banks and fiscal stimul...