Morgan Stanley: What Happens To Inflation After The Election

By Michael Zezas, Morgan Stanley Head of US Public Policy Research

The US Election and Inflation: Too Early to Call

Inflation in the US has been critical for markets. Covid had many profound effects on the economy, including a historic spike in inflation. The Federal Reserve and other central banks embarked on a sharp monetary policy campaign, raising interest rates globally, in stark contrast to the preceding decade of low and often negative rates. Now, inflation has fallen closer to – but still uncomfortably above – the inflation target, prompting debate about how the yield curve can and should respond. So, it's not surprising that we, like many investors, are focused on what the upcoming US election could mean for inflation.