What financial institutions must know about inflation right now

Remember inflation? Probably not, unless you're close to retirement. A growing group of voices worry that a combination of fiscal and monetary stimulus initially put in motion to address pandemic unemployment may drive the U.S. economy into an overheated condition that will harm both consumers and businesses. Plus steps to take to prepare.

Banks and credit unions are on the verge of a period the likes of which almost nobody currently employed in those institutions has encountered in their working lives.

It’s the outlook for high inflation that has the potential to upend almost everything that today’s bank and credit union executives have come to regard as “normal.”

In the worst scenarios, the stage is being set for a period of high inflation that would be accompanied by much higher interest rates and potentially then by recession as governmental over-reaction slams the brakes on the economy. Experts indicate that this trend could be global, as the causes go far beyond U.S. borders.

 

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