If you are covering US inflation hitting 7%, please find below a comment from Hinesh Patel, portfolio manager at Quilter Investors:
“With US inflation topping 7% for the first time in nearly 40 years, the economy is feeling the heat of the Federal Reserve’s stimulative pandemic monetary response and Washington’s fiscal pump. Unfortunately, for Jerome Powell, the Fed missed their window to start normalising sooner than this year when households will be feeling the crunch from dwindling savings caused by higher prices.
“While inflation was predominantly feeding through from the automotive, energy and pandemic-hit sectors, this is now moderating which makes the 7% figure all the more startling. Healthcare and housing/rental costs are likely to push higher and means it has now become stickier than first feared.
“We are at an historical moment for markets and developed economies. The current levels of inflation haven’t been seen for 40 years outside of emerging markets, and the historical comparisons highlight it could become tough going for markets. We have seen asset prices crumble at lesser points before so investors will need to watch data and markets ever closer and allocate their portfolio appropriately. The gains seen in the last few years are very unlikely to repeat themselves given where inflation is sat, and as such diversification, active management and prudency are the key tools for investors to use now.”
