Why would the war in Ukraine greatly raise the global inflation rate?
This question is extremely applicable to the current conflict because it will exponentially magnify the record high level of inflation, which began years ago as the Federal Reserve and central banks embarked on one of the most accommodative monetary policies ever.
In essence, by flooding countries worldwide with massive capital, the result was a tremendous rise in inflation. Currently, the CPI inflation index is at 7.9%, the highest level in 40 years. However, the war in Ukraine will dwarf the current level of inflation to levels that could reach double digits.
Until there is a resolution or end to the war in Ukraine, inflationary pressures will deepen and possibly result in a global recession. It is for that reason I believe that an ominous warning must be presented; inflation is already at a 40-year high which occurred before the invasion of Ukraine. The war in Ukraine will result in additional pressure that will take inflation yet higher. There is no other possible outcome until the war concludes.
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Wishing you, as always good trading,
Gary S. Wagner
The Gold Forecast