Deutsche Bank analysts caution that inflation risks are rising as 2025 approaches, driven by structural and recent trends. Despite expectations for inflation to stabilize, the bank underscores persistent pressures that could fuel further price increases.
Analysts point to central banks easing policies and accelerating money supply growth as key factors. This shift, combined with rising global tariffs and inflationary data, signals heightened inflation risks. Additionally, central banks, including the Federal Reserve, have adopted more dovish mandates, such as average inflation targeting, which could amplify these pressures.
Fiscal spending on aging populations, defense, and other priorities is another critical driver of inflation risks. Deutsche Bank highlights that the low-interest-rate environment of the 2010s was an anomaly, shaped by the Global Financial Crisis (GFC). The current landscape, they argue, suggests a return to higher inflation and interest rates.
The analysts note that investors have consistently underestimated inflation risks, leading to overly optimistic projections for central bank policies. This misjudgment has resulted in an underestimation of rapid rate hikes and excessive expectations for rate cuts.
Deutsche Bank concludes that while many anticipate inflation to return to target levels, the risks remain skewed to the upside, emphasizing the need for caution in navigating this evolving economic environment.


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