MyAQR Education Strategies About Us MACROECONOMICS Inflation Outlook: the Macro, the Micro, the Transitory October 27, 2021 Topics - Macroeconomics Global Macro Inflation Outlook: the Macro, the Micro, the Transitory Uncertainty over inflation has been unusually high this year, as rapid economic growth has been accompanied by large increases in prices for many goods and services. While economists had long expected that reopening would feature some degree of upward pressure on prices, the magnitude of acceleration in U.S. inflation was unexpected by most forecasters. Somewhat surprisingly, financial markets have had a relatively muted reaction to this bout of higher than expected inflation. What might explain their sanguine response? In our view, many investors (and policymakers) appear to have concluded that the recent pace of inflation is, to use the buzzword of the day, transitory. While there is good reason think recent high inflation rates will subside somewhat, we believe there are several factors suggesting a return to low and stable ~2% headline CPI readings is unlikely in the near term. Parsing recent data, we review these factors and what the investment implications might be if inflation proves more persistent than anticipated. Download Macroeconomic Collection Related Thinking When Stock-Bond Diversification Fails White Paper - October 27, 2021 This document has been provided to you solely for information purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such. 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