The US Federal Reserve’s (FED) chairman has retired the word “transitory” when describing inflation as he thinks it is no longer appropriate. Simultaneously, there is contemplation on the possibility of increasing the rate of tapering – the process of reducing Quantitative Easing. This will pave the way for an earlier increase of interest rates next year.
What I have previously shared about inflation is increasingly becoming a reality. Now we are currently experiencing the first wave of inflation.
Inflationary pressure and its build up in 2021
March 2021 saw a year-end inflation forecast, by the FED, of 2.4%. Then, they increased it to 3.4% in June and 4.2% in September. Finally, in October, US consumer prices ultimately surged by 6.2% year-on-year. This largest surge in the last 30 years shows that inflationary pressure is building up.
We are currently experiencing this first wave of inflation due to 2 reasons. Firstly, supply chain disruption has led to inflation....