Rising Inflation is a Win for Central Banks

#inflation

"Inflation is back (here to stay) and you should probably be relieved if not outright happy"-- Paul Ebeling

Inflation allows borrowers to pay lenders back with money worth less than when it was originally borrowed, which benefits borrowers.

When inflation causes higher prices, the demand for credit increases, raising interest rates, which benefits lenders.

Inflation-linked government bonds come into favor when prices rise because their principal and interest payments go up and down as prices change.

Economic projections released alongside the Fed’s policy statement last month showed the central bank projecting inflation to run at 4.2% this yr, more than double its flexible 2% target.

The US government will release fresh inflation data Wednesday afternoon.

Have a prosperous day, Keep the Faith!