- There is still a risk inflation expectations spiral out of control, Deutsche Bank warned.
- Strategists pointed to four reasons why stagflation risks remain present in the economy.
- It’s too early for the Fed to sound the all-clear on inflation just yet, the bank said in a note.
There are signs that investors should be concerned inflation makes a comeback and takes a path similar to the 1970s, and that means the Federal Reserve can’t afford to declare victory just yet, according Deutsche Bank.
Strategists pointed to the possibility that the US and other economies could re-enter a period of stagflation, with consumers’ expectations for future inflation spiraling out of control. That could result in a period of high inflation and sluggish economic growth, a situation that slammed the economy during the 70s and early 80s.
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