Investors’ expectations that interest rates will not rise much may be very misguided
This time when growth slows, inflation will in all likelihood still be too high for the Fed to stop tightening.
The Fed seems to be hoping that inflation will fall back to its 2 per cent target despite policy interest rates remaining negative after taking into account inflation.
Inflation has asserted itself as a major social and political issue for the first time in more than 40 years.
Sonal Desai FT 23 May 2022
The writer is chief investment officer at Franklin Templeton Fixed Income
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