Inflation remains stubborn and will rise until 2025.

Oct 13
Inflation had no impact on our lives at all for a long time. We are used to the notion that prices haven't increased much overall or have even decreased in some cases, such as with clothing and electronics. But historically speaking, this was a glaring exception, since inflation has roared back and shows no signs of abating.

According to the most recent US data, year-over-year inflation did not drop from 3.7% to 3.6% as predicted but rather stayed at the same level as the previous month. In September, consumer prices increased every month by 0.4%, despite analysts' expectations for a 0.3% decrease.
No one now anticipates that inflation will end shortly. The target level of 2% won't be reached until 2025, according to Fed Chairman Jerome Powell, who has already said as much on multiple occasions.

The IMF holds a similar perspective, arguing in its most recent analysis that even though global inflation will decline from 8.7% in 2022 to 6.9% this year, people will still experience a 5.8% increase in prices even in 2024. In comparison to the prior projection, this indicates that expectations for the following year have increased by 0.6%.

In general, as the world fundamentally transforms, consumers and investors should be ready for rising inflation rates. Both the Fed and the IMF were unable to incorporate the effects of the increasing Middle East crisis into their already dire predictions.

Of course, no one can predict the size of the fight, but protectionism is already emerging globally, and climate change, which has a huge impact on food supply, will not ignore pricing.

For many years, there was just one reason inflation was low: industrialized nations shifted their production to low-wage nations. However, as the US and Europe advanced toward greater independence, this tendency came to an end. Even though there has been a long-standing lack of skilled workers, more and more goods will be made locally.
The IMF now thinks that the main interest rate will be raised more than initially anticipated because of this trend of continuing price increases.

Most Open Market Committee members agree that another rate hike should be acceptable, according to the Fed meeting minutes from September 20.

Central banks will need to take substantially more of the money that has been injected into markets over the previous ten years to stimulate the economy out of the market to effectively lower inflation.

It may be predicted that monetary policy will be changed over the next few years to progressively forsake the 2% inflation objective and set a higher rate as the new normal at 3% or more. The alternative, however, would be a financial market collapse and severe recession.

Created with