Bank of America strategists announced the end of the era of low inflation, and the dollar will further strengthen in the future

It is reported that Athanasios Vamvakidis, the G-10 monetary strategy director of Bank of America, said that the strong labor and inflation report is strengthening some people’s belief that higher price pressure will continue, and the central bank’s efforts to bring inflation back to the expected target level will put its credibility under test. In view of the positive correlation between inflation and developed currency markets, this brings the risk of further strengthening of the US dollar. Vamvakidis declared the end of the era of low inflation. For Vamvakidis, the central bank’s dependence on a very loose monetary policy before the current inflation rate soared may exacerbate the economic pain to achieve the 2% inflation target.

Interpretation of this information:

Athanasios Vamvakidis, the G-10 monetary strategy director of Bank of America, has added his voice to the concern that strong labor and inflation reports are fueling the belief that higher price pressure will continue. He warns that attempts by the central bank to bring inflation back down to expected target levels will put its credibility to the test. This could potentially lead to a strengthening of the US dollar, as inflation and developed currency markets are positively correlated. Vamvakidis has declared the end of the era of low inflation. He argues that the central bank’s dependence on a very loose monetary policy before the current inflation rate soared may exacerbate the economic pain of trying to achieve the 2% inflation target.

Vamvakidis is suggesting that rising inflation poses a significant challenge to the central bank’s stated objectives. The ongoing trend of high inflation is forcing the bank to take tough decisions. It remains to be seen whether the bank’s reputation can survive this latest test of its credibility.

The three main keywords from this message are inflation, credibility, and monetary policy. The inflation rate has been rising, and many are worried about the implication of this trend. The central bank’s reputation, already strained in recent times, is once again being tested. And finally, the current monetary policy may exacerbate the economic pain of trying to achieve the inflation target.