Morgan Stanley says, A sharper V recovery in the global economy raises the case for inflation

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A sharper V recovery in the global economy raises the case for inflation says, Morgan Stanley
Alex Proimos from Sydney, Australia / CC BY

Earlier last month, Morgan Stanley believed that the considerable amount that has been put into surviving and supporting employment could make a difference in striving up inflation. But there remains a difference between the current economic downturn and the one that happened in the 2008 financial crisis that can drive consumer prices the way like never before.

Interest Rates are kept low 

Advanced marketplaces have fought with subdued inflation over the last ten years. This shows a progressive rise in prices, which is believed healthy in financial terms, has declined to make a difference. As a consequence, central bankers have sustained low-interest rates since 2008 in an effort to formulate price inflation. But, their efforts did not drive consumer prices to wherever they wanted it to reach. They also stated that this is unlikely to change with the pandemic outbreak as the global economy is in shock along with a higher unemployment rate.

Today analysts found that there is a sudden improvement in the global economy as many countries are coping with the pandemic in their ways and are able to boost the economy in some way or the other.

Global economy gathers momentum

The global economy is expected to improve to as it was at pre-pandemic levels mostly by next quarter, about three months beforehand than previously anticipated, statisticians at Morgan Stanley have stated that the economic equation has shifted decisively from the times of the outbreak. This is said to happen because many countries are able to manage the situation at the bay.

Prospective recovery with stronger inflation

The US economy could strike like Feb-March levels by the second quarter of 2021, while the undivided developed markets could relinquish that level by the third quarter of 2021. Linked with unparalleled levels of financial and monetary assistance and attainable disruptions to trade, the proposed recovery is expected to be followed by more substantial inflation, say the analysts.