Global | An update on the global outlook with a focus on inflation

Summary

Price pressures continue to build up; inflation is at high levels mainly in the US, but also in the Eurozone, while in China it remains still relatively low. The recovery will continue, but will lose momentum on the ongoing supply shocks and impact on inflation, which will lead CBs to act earlier, especially in the US.

Key points

• Key points:
• A solid demand recovery on stimuli, savings and vaccines, coupled with supply shocks, is fueling prices; growth and inflation are likely to ease.
• A host of supply shocks driven by all sort of bottlenecks and energy prices contributed to both lower growth and higher inflation, a textbook supply shock.
• Are we shifting to a new inflation regime with generalized wage pressures and higher expectations? Tradeoffs for policy makers are getting harder. Policy reaction will be key.

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