Insight -‘Terminal inflation’ jostles with ‘terminal rate’

Inflation dynamics: A customer at a Macy’s store in the United States. Countries with permanently higher inflation will also end up with weaker currencies. — Bloomberg

TERMINAL inflation rates more than terminal interest rates may be a better guide to how world currencies surf the post-pandemic world and war-driven commodities shock.

As major central banks prepare to normalise super-loose monetary policies and near zero interest rates in the face of surging oil and food costs – driven by economies reopening and spurred by Russia’s invasion of Ukraine – there’s much anxiety about just how high interest rates will need to go.