Here’s a picture of 1-year forward 1-year inflation.

It’s risen but it’s not arguing for problematic inflation.

The two-year forward picture has been turning lower, presumably as the market prices in fewer rate cuts.

I think there’s a portion of the market that is always worried about inflation and the post-covid environment certainly expanded their numbers. There’s always the possibility of another run-up in energy prices or some kind of shipping shock but I really don’t see a problem here. Yes, inflation could run at 3.5% instead of 2% and the Fed may even need to hike again but we’re not on the brink of some kind of fresh inflation problem.

This article was written by Adam Button at www.forexlive.com.