As the global economy emerges from its worst slump since the 1930s, we envisage plenty of inflation fertilisers at stake, especially in the United States. Inflationary trends could emerge due to a combination of factors, including the cyclical recovery as countries try to get the pandemic under control and gradually lift mitigation measures.
This will come at the same time as a super-sized US fiscal stimulus, thanks to the recently-passed $1.9tn fiscal package, which includes $1,400 direct payments to US citizens earning $75,000 a year or less, which will be disbursed quickly. The cheques could result in a big boost to consumer spending as early as April and could equate to the unfolding of huge pockets of pent-up demand in those sectors which have been hit the most by lockdowns.
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