Macro Views: Stagflation risk is rising but remains a tail scenario

After a strong global economic recovery in the first half of the year, the events of Q3 – weakening growth and continuing inflation – have become concerning and raise the potential risk of stagflation.

Stagflation is rare and the opposite of the macroeconomic environment we have experienced over the last decade. While it would be a nightmare outcome for the economy, for monetary policy and for investors, it is not our core scenario over the coming months. For this, we would need to see a more intense continuation of the current dynamic and a significant stalling in the reopening of economies.

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