Inflation: temporary or not? According to Deutsche Bank experts the danger of rising prices it is undervalued.
In the crosshairs of the analysts of the German company it ended up first and foremost Federal Reserve, which so far has downplayed the ongoing inflationary surge as transitory.
Despite going against the trend, Deutsche Bank has sounded an alarm: because theinflation today it’s a “Time bomb” ready to explode?
Inflation: bomb ready to explode, the reasons
In a prediction that is well outside the consensus of politicians and Wall Street, Deutsche Bank has issued a terrible warning: focus on stimulus and push back inflation concerns it will prove to be a mistake if not in the short term, at least in 2023 and beyond.
The analysis above all points the finger at the Federal Reserve and its policy of accepting rising prices without intervening, in the interest of a complete and inclusive recovery.
Deutsche Bank analysts believe that the decision not to ease support until inflation shows a sustained and sustained rise will have disastrous effects.
In summary, today’s inflation is not just transitory and raises an alarm.
Deutsche chief economist David Folkerts-Landau did not mince words in predicting that the delay in central bank interventions “Could create a significant recession and trigger a chain of financial difficulties around the world, especially in emerging markets “
Acting before it’s too late is the suggestion. Although the look up work and the Fed’s social disparities as real growth targets are laudable, neglecting the price front could be a mistake.
Prices and rates: 70s scenario?
Deutsche’s team said that incoming inflation could resemble the experience of the 1970s, a decade during which inflation averaged nearly the 7%, double-digit at various times. The rise of food and energy prices along with the end of price controls it contributed to the surge in that era.
Then Fed Chairman Paul Volcker spearheaded the effort to crush inflation, but he needed to use dramatic interest rate hikes that triggered a recession. The Deutsche team fears that such a scenario could repeat itself.
And with suddenly higher rates and a highly indebted world after Covid, the bomb could go off.