Central bank role: A car drives past the Federal Reserve building in Washington. The Federal Reserve has contributed to the zeitgeist with its insistence that it isn’t even thinking about raising interest rates, amid signs the economic recovery will be unimpressive enough to warrant further stimulus. — AP
WITH gold above US$2,000 and central banks flooding the world with cash, the prospect of surging inflation is again starting to exert a grip on the minds of investors. Concern is premature: Deflation remains the bigger threat.
There’s little sign of a meaningful spurt in consumer prices, even after five months of unparalleled easing in fiscal and monetary policy to combat the pandemic.
Not that you’d know it from some market commentary. Believers in a looming inflation spiral cite gold’s almost daily records and a slide in the dollar. Inflation expectations as measured by the US 10-year breakeven rate have risen by more than a percentage point to 1.6% from a 12-year low in March.
The Federal Reserve has contributed to the zeitgeist with its insistence that it isn’t even thinking about raising i10nterest rates, amid signs the economic recovery will be unimpressive enough to warrant further stimulus.
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