Inflation's role in recent market turmoil

 

A huge sell-off in equity markets, and inflation is apparently to blame. Why does inflation matter? Well, if inflation goes up, then central banks raise interest rates.

And if interest rates go up on safe assets, then risky assets, such as equities, become less valuable. So is inflation really rising across the world? The catalyst for the stock market downturn were US wage figures about a week ago. These showed US wages rising at an annual rate of 2.9% when market expectations were about 2.6%, 2.7% - a lot higher than expected, and the highest rate since 2009. Put that together with the booming global economy, and you have the recipe for inflation rising across the world. Watch the video below

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