{"id":2416056,"date":"2021-10-20T11:53:23","date_gmt":"2021-10-20T15:53:23","guid":{"rendered":"https:\/\/www.valuewalk.com\/?p=2416056"},"modified":"2021-10-20T11:53:23","modified_gmt":"2021-10-20T15:53:23","slug":"inflation-lower-than-expected-but-goldilocks-economy-goal-still-elusive-and-stagflation-fears-persist","status":"publish","type":"post","link":"https:\/\/www.valuewalk.com\/inflation-lower-than-expected-but-goldilocks-economy-goal-still-elusive-and-stagflation-fears-persist\/","title":{"rendered":"Inflation Lower Than Expected But Goldilocks Economy Goal Still Elusive And Stagflation Fears Persist"},"content":{"rendered":"<p>&#8220;The latest <a href=\"https:\/\/www.valuewalk.com\/debunking-the-supply-chain-myths\/\">CPI<\/a> reading has \u00a0come in a touch lower than August at 3.1%, after the artificial blip from last year\u2019s Eat Our to Help Out scheme dropped out of the figures.<\/p>\n\n\t<!-- Begin Mailigen Signup Form -->\n\t<script type=\"text\/javascript\">\n\t\tif (typeof jQuery == 'undefined') {\n\t\t\tdocument.write('<scr' + 'ipt type=\"text\/javascript\" src=\"https:\/\/list.mailigen.com\/js\/jquery.js\"><\/scr' + 'ipt>');\n\t\t}\n\t<\/script>\n\t<script language=\"javascript\" type=\"text\/javascript\" src=\"https:\/\/list.mailigen.com\/js\/scripts.js\"><\/script>\n\t<script language=\"javascript\" type=\"text\/javascript\" src=\"https:\/\/list.mailigen.com\/js\/subscribe2.js\"><\/script>\n\t<div id=\"MG-placeholder\">\n\t<style>.first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important}\n\n\tform.ebook-styles .error,\n\tform.ebook-styles #error {\n\t\tcolor:#d00;\n\t}\n\tform.ebook-styles .formfields h1,\n\tform.ebook-styles .formfields #mg-logo,\n\tform.ebook-styles .formfields #mg-footer {\n\t\tdisplay: none;\n\t}\n\tform.ebook-styles .formfields {\n\t\tfont-size: 12px;\n\t}\n\tform.ebook-styles .formfields p {\n\t\tmargin: 4px 0;\n\t}\n\t<\/style>\n<div style=\"background:#eee;display:block;overflow:hidden;margin-bottom:24px;padding:40px;\">\n<div class=\"two-thirds first\">\n<p style=\"font-size:22px;margin:0 0 10px;\">Get The Full Henry Singleton Series in PDF<\/p>\n\t<p style=\"line-height:1.4;margin-bottom:0;\">Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues<\/p>\n\t<form action=\"https:\/\/valuewalk.us4.list-manage.com\/subscribe\/post?u=c3eb7a1d092fc854772c834e0&amp;id=f6f5bdb8b5\" method=\"post\" id=\"mc-embedded-subscribe-form\" name=\"mc-embedded-subscribe-form\" class=\"validate\" target=\"_blank\" novalidate>\n <div id=\"mc_embed_signup_scroll\">\n \n\t\t\t\t<div class=\"af-element mc-field-group \">\n\t\t\t\t\t<div class=\"af-textWrap c1\"><input type=\"email\" value=\"\" placeholder='Email Address' name=\"EMAIL\" class=\"required af-element email\" id=\"mce-EMAIL\"><\/div>\n\t\t\t\t\t<div class=\"af-clear\"><\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<div class=\"af-element buttonContainer\">\n\t\t\t\t\t<input type=\"submit\" value=\"Subscribe\" name=\"subscribe\" id=\"mc-embedded-subscribe\" class=\"button\">\n\t\t\t\t<\/div>\n \n \n\t<div id=\"mce-responses\" class=\"clear\">\n\t\t<div class=\"response\" id=\"mce-error-response\" style=\"display:none\"><\/div>\n\t\t<div class=\"response\" id=\"mce-success-response\" style=\"display:none\"><\/div>\n\t<\/div>    <!-- real people should not fill this in and expect good things - do not remove this or risk form bot signups-->\n    <div style=\"position: absolute; left: -5000px;\" aria-hidden=\"true\"><input type=\"text\" name=\"b_c3eb7a1d092fc854772c834e0_f6f5bdb8b5\" tabindex=\"-1\" value=\"\"><\/div>\n    \n    <\/div>\n\t<\/form>\n\t<script type='text\/javascript' src='\/\/s3.amazonaws.com\/downloads.mailchimp.com\/js\/mc-validate.js'><\/script><script type='text\/javascript'>(function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true);<\/script>\n<\/div>\n<div class=\"one-third\">\n<img decoding=\"async\" src=\"https:\/\/www.valuewalk.com\/wp-content\/uploads\/2017\/02\/Singleton-1.jpg\" alt=\"Henry Singleton eBook\" style=\"width:100%; height:auto\">\n<\/div><\/div><\/div><!-- End Mailigen Signup Form -->\n<p style=\"text-align: center;\"><a href=\"https:\/\/valuewalkpremium.com\/q3-2021-hedge-fund-letters\/\" target=\"_blank\"><em><strong>Q3 2021 hedge fund letters, conferences and more<\/strong><\/em><\/a><\/p>\n<div class=\"ca-widget\" data-token=\"m4bce0adee6c\"><\/div>\n<p><script async defer src=\"https:\/\/secure.money.com\/embeds\/embedder.js?v=1\"><\/script><\/p>\n<h2>Reaching A 4%\u00a0Inflation Target<\/h2>\n<p>It is forecast to reach 4%, double the Bank of England\u2019s target by the end of the year, and potentially 5% by next April. With prices staying stubbornly high and another surge expected, a gentle rise in <a href=\"https:\/\/www.valuewalk.com\/financial-impacts-and-opportunities-in-a-low-interest-rate-environment\/\">interest rates<\/a> before the end of the year still looks likely if there is any chance of keeping a Goldilocks economy within reach.<\/p>\n<p>Too much inflation in the mix risks the <a href=\"https:\/\/www.valuewalk.com\/the-economic-growth-is-decelerating\/\">economy<\/a> getting too hot, leading prices to spiral upwards. If rates are pushed up rapidly, there\u2019s a risk it gets too cold, freezing off economic growth. A 2% inflation target is considered just right, as long as the economy also keeps growing.<\/p>\n<p>But the recovery is already judged to be cooling rapidly due to supply chain issues, labour shortages\u00a0 and <a href=\"https:\/\/www.valuewalk.com\/record-energy-prices-are-triggering-energy-crisis-talk-among-experts\/\">energy price surges<\/a>. Avoiding the bad dream of stagflation will still be the priority, rather than the lofty aims of a goldilocks economic utopia. If gas prices continue to spike and power rationing is introduced by energy intensive industries, economic growth could be knocked back into a downturn. While there is still dissent around the table, and there is a chance this slightly lower reading may hold off members of the \u00a0Monetary Policy Committee from voting for a rate rise in November, the financial markets have largely priced a rate rise in by the end of 2021, followed by further rises next year.<\/p>\n<p>A certain amount of nervousness ripples through the <a href=\"https:\/\/www.valuewalk.com\/putins-energy-promises-help-calm-storm-of-rising-prices-pummeling-the-financial-markets\/\">financial markets<\/a> at the very thought of a rate hike, given that investors have become somewhat used to this era of ultra-low rates, so this edge downwards in CPI in September may provide some short term relief.<\/p>\n<p>But even if the <a href=\"https:\/\/www.valuewalk.com\/industry-reaction-to-the-latest-rightmove-house-price-index\/\">Bank of England<\/a> does raise the base rate by a few notches in the months to come, it isn\u2019t forecast that it will go much beyond 1% next year.<\/p>\n<p>That is because central bank policymakers still believe inflation is transitory. Like porridge without enough milk, it\u2019s sticking around for a lot longer than was previously thought, but is expected to ease off as pandemic supply chain issues finally lift.<\/p>\n<h2>A New 'New Normal'<\/h2>\n<p>However ultimately we still don\u2019t know if rising prices will become the new \u2018new normal\u2019 or\u00a0if\u00a0they\u2019re just a temporary result of us emerging from a pandemic and a year of lockdowns and restrictions. There are worries they will linger for a lot longer. Make UK , the manufacturers organisation has warned that inflation risks becoming baked in, and the Food and Drink Federation has also warned that soaring ingredients prices will lead to a bubbling up of prices in bars and restaurants.<\/p>\n<p>Even if there is a rise of the base rate to 1% it would see interest rates back at 2009 levels, a time when the economy was in the recovery position following the financial crisis, but would still be very low on a historic basis.<\/p>\n<p>Even so unwinding mass <a href=\"https:\/\/www.valuewalk.com\/gold-massive-buying-opportunity\/\">bond buying<\/a> programmes, which has made borrowing cheap is also likely to be a slow process. The last shock governments want right now is to see the rate of interest they have to pay on their debts escalate, and central banks will be keen to avoid any kind of \u2018taper tantrum\u2019 on the bond markets, witnessed in 2013 when US treasury yields rose sharply after the Federal Reserve announced a roll back of its quantitative easing programme. So rate rises are likely to be incremental, accompanied by soothing words of assurance that soaring inflation will ultimately end up being fleeting.\"<\/p>\n<p><strong><em>Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown<\/em><\/strong><\/p>\n<hr \/>\n<p><strong>About Hargreaves Lansdown<br \/>\n<\/strong><\/p>\n<p>Over 1.67 million clients trust us with \u00a3138.0 billion (as at 30 September 2021), making us the UK\u2019s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.<\/p>\n ","protected":false},"excerpt":{"rendered":"<p>&#8220;The latest CPI reading has \u00a0come in a touch lower than August at 3.1%, after the artificial blip from last &#8230; <a title=\"Inflation Lower Than Expected But Goldilocks Economy Goal Still Elusive And Stagflation Fears Persist\" class=\"read-more\" href=\"https:\/\/www.valuewalk.com\/inflation-lower-than-expected-but-goldilocks-economy-goal-still-elusive-and-stagflation-fears-persist\/\" aria-label=\"More on Inflation Lower Than Expected But Goldilocks Economy Goal Still Elusive And Stagflation Fears Persist\">Read more<\/a><\/p>\n","protected":false},"author":19164,"featured_media":2340389,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[6640],"tags":[],"states":[],"acf":[],"modified_by":"Umair Tariq","_links":{"self":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2416056"}],"collection":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/users\/19164"}],"replies":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/comments?post=2416056"}],"version-history":[{"count":0,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/posts\/2416056\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/media\/2340389"}],"wp:attachment":[{"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/media?parent=2416056"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/categories?post=2416056"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/tags?post=2416056"},{"taxonomy":"states","embeddable":true,"href":"https:\/\/www.valuewalk.com\/wp-json\/wp\/v2\/states?post=2416056"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}