If the difficulties in bringing new goods and inputs will continue, inflation will continue to increase due to the problems in the supply of raw materials and chips, as well as the production and sales made from stock, after a point, in a global supply squeeze environment. Of course, supply and stock shortage is an uncontrollable factor and specific plans must be put forward. However, the issue that compels us is the effect of the revitalizing policies put forward by the central banks during the pandemic period. On the one hand, low-interest, abundant liquidity programs aiming to activate the economy, and on the other hand, the effect of this on total demand. When the supply and demand balance moves away from the break-even point and tight supply – high demand emerges, it is inevitable that the acceleration of prices will increase.
In this respect, the pandemic crisis and its aftershock, the supply supply crisis, take us to a point that is qualitatively different from the previous crisis period. The demand shock, which also occurred in the 2008 global crisis caused by the financial system and payment difficulties, actually came first in the health crisis, cyclically. Afterwards, while the policies implemented to get out of the crisis left the short-term recession feeling behind and brought the recovery momentum; The supply, which could not keep up with the demand, caused a new problem: Inflation. The global inflation trend is not a cyclical formation that emerged with reflationary policies. It is a situation that arises with factors beyond the policy control and the policies applied should not make an extra contribution to this. After all; If inflation is low due to market recession, you try to increase it, and if it is excessively high, you try to decrease it.
So, the event takes us from the beneficial effects of QE to the potentially harmful effects. The demand phenomenon seems to be somewhat balanced with the financial conditions that will have a limiting effect on consumer loans, vehicle and mortgage loans. Because it is difficult for interest rates close to zero to restrain demand despite the absence of supply and input. Considering how long it will last and the fact that there is a supply crisis for which a specific application has not yet emerged, it is difficult to predict when the market will loosen and drive costs down.
We have looked at QE, which we looked at from the employment window yesterday, through the total supply/total demand balance and inflation dynamics today. In an environment where the stage of reining the pandemic and returning to economic normal is generally accepted; Central banks have to act within the framework of decisions reached from an analytical point of view, not only on visible factors. A reasonable level of QE reduction therefore seems plausible.
Kaynak Tera Yatırım
Hibya Haber Ajansı
Kaynak: Hibya Haber Ajansı
