Why Trump and other trends all point to higher inflation
Societal forces from politics to geopolitics to de-globalisation to ageing and climate change are creating conditions that push towards higher inflation.
In many countries, the political landscape is changing dramatically, auguring more radical policies in both the United States and Europe. Faced with societal ageing, de-globalisation, climate change, anti-immigration sentiment, and technological advances, central banks will feel pressure from many different directions in the coming years.
One obvious concern is fiscal policy and debt. When radical politicians come to power, they rarely have austerity in mind. Most arrive with big audacious plans requiring massive increases in spending.
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Raghuram G. Rajan, former governor of the Reserve Bank of India, is Professor of Finance at the University of Chicago Booth School of Business.
