Inflation is not back


Overall, there is little doubt that the major central banks will hardly change their established expansive central bank policy in the coming years. Low interest rates and yields should therefore remain with us. A cornerstone of this assumption is the very moderate inflation outlook in virtually all relevant industrialized countries.

This outlook should not be changed by the current rise in inflation. The rise in consumer prices in recent months was due to a number of special factors that should not lead to a sustained increase in inflationary dynamics. One important factor was the lack of summer sales or summer sales that were less pronounced than usual. In addition, higher costs resulting from the Corona pandemic were increasingly passed on. In view of the weak demand, however, the scope for price increases is likely to be limited. It is therefore to be expected that the inflation dynamic will level off again in the coming months. Only in Germany can a higher inflation rate be expected in the coming year as a result of the normalisation of the value-added tax.

However, if inflation remains weak, the central banks will not lower interest rates any further, as the negative consequences would outweigh the positive effects. There is therefore much to suggest that we are facing hardly noticeable monetary policy cycles in the coming years. The valuation of shares, but also the gold price, could continue to benefit from this.

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