As the debate on where inflation will go in the years ahead continues, those arguing that a period of high inflation is coming are missing or ignoring an important consideration that will have a bearing on inflation outcomes. This is that the Covid-19-induced fiscal stimulus that is often cited as the reason for higher inflation expectations, and therefore bond yields in the US and other countries, is not permanent but transitory.

Fiscal consolidation at a global scale will have to follow soon after countries reach herd immunity and economic activity normalises, to reduce debt-to-GDP ratios that according to the IMF have reached almost 100% in many countries. But fiscal consolidation should, theoretically, be disinflationary not inflationary...

Subscribe now to unlock this article.

Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).

There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.

Cancel anytime.

Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.