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US inflation will accelerate Fed tightening, favoring assets that protect against rising prices

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In the US, consumer price inflation in November accelerated to 6.8% from last year, a nearly 40-year high. The greatest pressures come from energy (+ 33%), used cars (+ 31%), food (+ 6.1%) and housing (+ 3.8%), not to mention that the figure is exacerbated by the comparison with the very low inflation of 2020.

While expected, this is by far the highest of the world‘s developed economies, and well above the Federal Reserve’s 2% average inflation target. “This will accelerate Fed policy tightening and keep markets on a tightrope while supporting the assets they defend against inflation, from cryptocurrencies to commodities and real estate,” said Ben Laidler, eToro’s global markets strategist.

In any case, according to the expert, an easing of inflation is likely, in line with the slowdown in economic growth and the adjustment of supply chains. Consensus forecasts are for inflation of 4.6% this year and a still high 4.2% next.

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