According to analysts at Deutsche Bank, rising inflation is a global “time bomb”. Experts warned against ignoring inflation as it might cause another devastating crisis.
Deutsche Bank emphasizes that countries’ authorities are stimulating economies, ignoring inflationary risks. Such an approach could lead to a catastrophe. Experts also suppose that the US Fed’s refusal to tighten the monetary policy until a confident rise in inflation may result in serious economic consequences.
“The consequence of delay will be greater disruption of economic and financial activity than would be otherwise be the case when the Fed does finally act,” Deutsche’s chief economist, David Folkerts-Landau said. “In turn, this could create a significant recession and set off a chain of financial distress around the world, particularly in emerging markets.”
The US politicians believe that the current inflation growth is just a short-lived phenomenon. It is likely to slow down due to the normalization of the supply process and the elimination of the pandemic consequences.
However, analysts at Deutsche Bank have opposite views on the situation. They are sure that aggressive stimulus and fundamental economic changes may cause a new surge in inflation “that the Fed will be ill-prepared to address.”
“Neglecting inflation leaves global economies sitting on a time bomb,” Folkerts-Landau said. “The effects could be devastating, particularly for the most vulnerable in society,” he pinpointed.
