Is Inflation on Its Way Back to the West?

Shoppers and investors could be hit with higher inflation sooner than they are bargaining for, economists warn.

Inflation across the developed world has been low or non-existent for several years now, but with the U.S. Federal Reserve expected to act soon on interest rates, analysts expect it could take off sooner than forecast.

Stock markets are on tenterhooks ahead of the Fed’s decision on Thursday, when many believe its rate-setting committee under Chair Janet Yellen will raise rates for the first time in more than a decade.

As the west tries gradually to return to normal monetary policy after the global financial crisis, central bankers are trying to emphasize stability and continuity. Many economists agree that the sustained period of low-to-zero inflation is likely to continue.

However, analysts add that the inflation cycle may be hard to control — particularly if commodity prices rebound from their current lows. If consumers take advantage of low oil and food prices, and the consequent extra buying power they have, to get back into the shops, this could also start to push inflation higher, faster.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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