Inflation playbook – Managing through an inflation cycle
April 26, 2023 | MercerInsight Community
Speed read
• After the 2021-2022 inflation shock, we enter 2023 with signs that cyclical inflation is easing, especially in the US. We anticipate inflation stabilizing near central bank target levels over the next one to three years, but recognize there are risks to this outcome.
• Higher inflation and greater inflation volatility, for example, remain long-term risks driven by structural factors, including globalization slowing as the world is factionalizing, inadequate investment in the commodities supply chain and potential public debt monetization.
• As a result, portfolios should remain positioned to weather various economic and inflationary scenarios by including a diversified mix of inflation-sensitive asset classes, while being conscious of current valuations.
