Currently, the global economy is growing very strongly – a trend that will continue in the coming year. Growth of between four and four and a half per cent is expected. While Europe is facing a weak winter term, the economy is also expected to pick up again by the middle of the year. This recovery initially favours further higher inflation rates, as does the fact that governments are continuing to fuel demand with billion-euro aid packages.

Most recently, there has been a significant increase in inflation rates on both sides of the Atlantic: In the eurozone, the inflation rate rose to almost five per cent in November and to 6.8 per cent in the US. Inflation was driven by energy prices, base effects and supply bottlenecks in the wake of supply chain disruptions. In the US, for example, used car prices climbed 31 per cent year-on-year due to shortages. “We expect rates to decline, however, in 2022,” Gerlinger pointed out. This should be caused by better functioning supply chains, a normalising oil price and base effects: In countries such as Germany, the value-added tax, which was raised again in 2021, will be excluded from computing the inflation.

A permanently higher inflation rate would only be impending in the event of a wage-price spiral. There is no sign of that, however, at least in Europe. Wage increases have recently been moderate. The situation is somewhat different in the US, where higher wages are already being paid. The US Federal Reserve will accelerate the scaling back of its bond-buying programme and possibly start raising key interest rates as early as the first half of 2022 to dampen the price trend. In the eurozone, on the other hand, interest rates are expected to remain low for the time being.

In conclusion: “Next year, declining inflation will set in, but is not likely to accelerate until the second half of the year,” said Gerlinger. A rate of just under three per cent is expected in the US towards the end of 2022, and around two per cent in Europe. In the medium and longer term, however, rates are likely to settle above the pre-corona crisis level, meaning three to four per cent for the US and two to three per cent for Europe. “In the long run, higher wages will have a price-driving effect – including due to demographic developments. Progressive de-globalisation and the costs incurred for climate protection are additional factors,” explained Gerlinger.

In this environment, fixed-interest securities remain fairly unattractive. In the US and the eurozone, central banks are keeping yields relatively low while inflation is rising. Gold is considered a good inflation hedge. “Long-established market mechanisms, however, remain suspended,” Gerlinger mentioned. Higher inflation rates and expectations as well as negative real yields have failed to drive the gold price upwards recently. At the current time, gold is merely a diversification asset.

Equities therefore remain the investment of choice. “US stocks are still highly valued, but we continue to see them as attractive, not least against the backdrop of continued strong corporate data and high earnings growth,” said Gerlinger. Continued share buybacks are also providing support. Europe’s equity markets, currently more favourably valued, enjoy strong cyclical positioning and should then also benefit significantly from the upcoming economic recovery.

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