Deflation is a bigger risk than inflation as Fed injects trillions into economy, BofA says
The reflexive argument made by investors after the Fed injects trillions of dollars into the economy is to prepare for inflation, but Bank of America expects deflation, according to an analyst note published Friday morning.
The bank said the"reflexive argument" being made now was also made coming out of the 2008-2009 recession, as many investors"pointed to the massive 'money' creation by the Fed and the huge fiscal stimulus."But when looking at core CPI, prices have historically fallen both during and after recessions. In April, core CPI dropped 0.45%, marking the weakest data point since the index was created back in 1957.
Additionally, the April NFIB survey of small businesses showed the share of firms raising their prices was at its lowest level since 2009.
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