Markets are priced for disinflationary perfection

Inflation was dormant for long, and even considered dead in the wake of the Great Financial Crisis. Yet 2022 saw the genie get out of the bottle. We are confident that price pressure is past its peak. But its decline will be slow and bumpy, requiring a prolonged period of high rates – and some patience until central banks pivot. Underlying price pressure may reach targets over the next 2-3 years. The outlook is surrounded by substantial uncertainties, with the risks tilted towards a stickier overshoot.

Download the full publication below