Olivier de Berranger, director of asset management at La Financière de l’Echiquier (LFDE) warns that “inflation is here to stay and both political and monetary authorities lack an extinguisher”, while Natixis warns that “beyond the cyclical inflation, we are being able to see how prices are already beginning to affect other acyclical goods and services ”.
“The amplitude of inflation, seen in both the cyclical and acyclical parts of the economy, is driving up consumer inflation expectations. This increase could become structural if people believe that inflation is here to stay. In turn, this leads to a permanent change in household behavior. Consumers today anticipate historic price increases in household necessities! “Warn these experts.”
Berranger explains that inflation has in the past been a matter of monetary policy and, eventually, of economic policy.
However, after the recent record highs (6.2% in the case of annual inflation in the US in October) it is becoming a hot and purely political topic, to the point that Joe Biden has declared that he has made her “top priority,” when until now she had barely talked about her.
The US central bank has not stopped repeating since the beginning of the year that inflation, which was supposedly temporary, but now the situation could be different. In addition, both the Fed and the ECB have committed to maintaining an adequate monetary policy so that financial conditions are lax during the recovery, something they can do under their new mandates.
The ECB has followed the same line.
