Although global inflation remains high, the market is betting that the US and European central banks have limited room to raise interest rates. In response, Deutsche Bank strategist Henry Allen believes that based on the upward pressure on prices, investors have underestimated the extent of interest rate hikes needed to curb inflation. He said that while there is a limited outlook on interest rate hikes between the Federal Reserve and the ECB, there is increasing inflationary pressure, but this kind of “fundamental disconnect” seems unsustainable.

Although global inflation remains high, the market is betting that the US and European central banks have limited room to raise interest rates. In response, Deutsche Bank strategist Henry Allen believes that based on the upward pressure on prices, investors have underestimated the extent of interest rate hikes needed to curb inflation. He said that while there is a limited outlook on interest rate hikes between the Federal Reserve and the ECB, there is increasing inflationary pressure, but this kind of “fundamental disconnect” seems unsustainable.