by Matthew Kerkhoff
Financial Sense
The world is awash in worries about deflation, but here in the US, it appears that inflation is making a comeback. If this new trend continues, it may catch a lot of investors off guard.
Inflation, or the lack thereof, drives financial markets with an unforeseen force. It has strong implications regarding everything from long-term interest rates to capital spending plans to Federal Reserve monetary policy.
Roughly four years, the Fed was able to hit its 2% inflation target. Since then, we’ve been over a prolonged period of disinflation, which the Federal Open Market Committee (FOMC) has been trying to overcome.