Highlights

  • The origin of soaring food prices is not solely from the fallout of the crisis in Ukraine but also due to the ban of some exports from countries attempting to curb their domestic inflation.
  • Consumers, firms and the financial markets expect elevated inflation over the next year or so but not over the longer term.
  • The UK and US will continue to see monetary tightening to reduce inflation overheating while the path of the Euro Area is still uncertain.
  • As globalization is mildly in reverse, there’s a rise in bringing production back, the trend of ‘reshoring’ and ‘nearshoring’.
  • Despite some recent moves in the bond markets, Krugman’s view is the structural forces that historically kept bond yields low are still in place.
  • The role of the US dollar as a key currency is not currently under any threat.
  • The US and China trade relationship will gradually decouple over time and not abruptly.

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