Global | Assessing the risk of an inflation regime change
Inflation in advanced economies is set to rise this year to the highest rate in a decade. This has sparked fears of a shift to a high inflation regime which could feature inflation persistently above 5% and with very different dynamics. Such a shift would have profound consequences for economies and financial markets.
What you will learn:
- While the evidence suggests a shift to a high inflation regime can’t be ruled out, for now we would only give it a probability of around 10% for the global economy, and a slightly higher 15% for the US.
- Our modelling shows that since the 1950s a given economy has roughly a 10% chance of switching from low to high inflation from year-to-year.
- The risk of a sudden shift now is lower than in past decades as the period since the 1990s has seen generally well anchored long-term inflation expectations, thanks in part to inflation targeting.
Tags:
Related Services

Post
CRE key themes 2024 – A year of transition
After a difficult 2023, we think five key themes will shape the outlook for commercial real estate next year.
Find Out More
Post
Japan Key themes 2024 – Will wage-led inflation gain momentum?
Inflation will likely decelerate in 2024 as the impact of imported inflation wanes. We expect the Bank of Japan will end its negative interest rate policy in April after confirming a high wage settlement. But our medium-term projection is that a zero-interest rate policy will take its place and last for years.
Find Out More