U.S. inflation, which has declined for three months in a row, could rise again due to labor market problems, Bank of America warns. There is a chronic labor shortage due to a decline in the number of immigrants compared to previous years. In addition, the jump in inflation will contribute to another sharp rise in commodity prices amid economic recovery in China, in which the country will significantly increase demand for oil, the bank said.
The departure of the world's central banks from the policy of tightening interest rates will also accelerate inflation. At the same time, a recession is coming, which the BoA considers a big problem. A surge in U.S. unemployment will be accompanied by a decline in personal savings by Americans and a rise in the interest rate on credit cards to record levels. In these conditions, the bank recommends investors to switch to commodity assets and shares of non-U.S. companies.