Stories drive short-term market sentiment and stock prices. That is the reality. And there is no bigger narrative today than “surging” inflation in the US, the world’s largest economy — especially after the inflation rate in April 2021 came in at 4.2%, the fastest clip since 2008.

It is fodder for lively debate: whether we are on the path to sustained higher inflation that would force central banks to tighten monetary policies sooner than expected. We too have written fairly extensively on this subject. In fact, we had predicted that inflation would pick up steam, as articulated in our column back in February (“A bull or bear market for 2021?”, Issue 971, Feb 15). All right, we are out by two months, as we expected back then that inflation would cause market jitters in July instead of May.

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