Five-year "breakevens" measuring inflation expectations have jumped to 2.71pc, the highest since the pre-Lehman boom.
Yet the Fed is continuing to buy $120bn of bonds each month.
Agustin Carstens, the managing director of the BIS, said: “The households at the lowest end of the income spectrum are the least able to hedge against it: their income is usually fixed in nominal terms and their savings held in cash or bank accounts. The best contribution monetary policy can make to an equitable society is to try to keep the economy on an even keel by fulfilling its mandates of stable prices and sustainable economic activity."
Rates may have to go to 3pc, 4pc, or 5pc, and that changes all the assumptions about fiscal sustainability,” said Tim Congdon from the Institute of International Monetary Research.
Current equity multiples are a function of near-zero funding costs. As soon as rates rise in earnest - or even threaten to do so - Wall Street will look forbiddingly overvalued.
Ambrose Evans-Pritchard Telegraph 7 May 2021
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