LONDON (Reuters) - BofA expects U.S. inflation to remain elevated for two to four years, against a rising perception of it being transitory, and said that only a financial market crash would prevent central banks from tightening policy in the next six months.
It was “fascinating so many deem inflation as transitory when stimulus, economic growth, asset/commodity/housing inflations (are) deemed permanent”, the investment bank’s top strategist Michael Hartnett said in a note on Friday.
Hartnett thinks inflation will remain in the 2%-4% range over the next 2-4 years. U.S. inflation has averaged 3% in the past 100 years, 2% in the 2010s, and 1% in 2020, but it has been annualizing at 8% so far in 2021, Bofa said in the note.
Global stocks were holding near record highs hours ahead of the reading of May core personal consumption expenditures index, an inflation gauge tracked closely by the Fed. The gauge is estimated to rise 3.4% year-on-year.