Sterling does the rise and fall as UK inflation hits 40-year high

The knee-jerk reaction over the past few months has been to equate higher inflation with more aggressive central banks. But amid the recent subtle shifts by the Fed, RBA, and BOE, it is clear we are now into the second-half of the tightening cycle where the previous rules stop applying.

As the tightening cycle reaches a stage where it is slowing down considering that economic conditions are worsening, higher inflation can work as a double-edged sword in some sense.

Michael Cooper

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