Investment Outlook H2 2021 (Part 2)
Friday 09 July 2021
We are already reaching the peak of economic acceleration. What matters going forward is what will be left of this bounce in growth and inflation. For the first time in decades, there is a desire for inflation. Central Banks will let the music play on, they will neglect inflation risk for as long as possible, and they will archive it as a temporary effect. We are moving away from the great moderation, with the end of the rule-based monetary and fiscal regime. It takes time before institutions adapt to a new regime. The next Volker is not around the corner. Higher inflation and the volatility of inflation will be key features of this new regime. Investors believe they will wake up in the 30s, while they will end up waking up in the 70s.