Higher-for-Longer Inflation Remains the Biggest Tail Risk:
According to a closely-watched Bank of American survey of fund managers, the biggest tail risk by far remains “higher-for-longer” inflation (40%) followed by “worsening geopolitics” at 17%. The probabilities of a “deep global recession” (16%), “persistently hawkish central banks” (15%) and “systemic credit event” (8%) were much less. The Pew Research Center stressed that the economy is the public’s top policy priority. Americans want their government to stabilize growth and reduce inflation. Inflation has become such an important public issue that even the President of the U.S. is compelled to comment on CPI reports, as he did on Valentine’s Day. This sensitivity keeps investors guessing whether policies will ever be able to bring back inflation to an acceptable level, in a timely fashion.
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By Hubert Marleau
By Hubert Marleau
