Since the beginning of the coronavirus pandemic, all eyes have been on the unfolding health catastrophe and the consequences of confinement: economies halted, exploding rates of unemployment (in particular in the United States), and rising debt levels. In this extraordinary context, inflation is often overlooked. This is a dangerous mistake, in our view. For investors, now more than ever, it is crucial to keep a very close eye on this metric—in particular, since we may be at the beginning of a complete regime shift.
In this new edition of the “Day After” series, in which we explore the impacts of the coronavirus for investors, we outline our views on inflation in both the short and long term, and we argue that we may be at the cusp of a complete regime shift. In the short term, the coronavirus pandemic is clearly likely to mean volatility in inflation figures, given factors pulling in opposite directions. In the longer term, and after four decades of low inflation across most economies, we may enter into a new high-inflation regime.
Read the complete whitepaper now at the link below