Grant's Interest Rate Observer.

Inflation in 2018?

Macro and micro

In a Twitter bulletin this afternoon, Jeffrey Kleintop, chief global investment strategist at Charles Schwab & Co. writes: “For the 1st time in a decade the global economy has absorbed all of its excess capacity as it heads into 2018, per OECD data.”

Meanwhile, Barry Logan, senior vice president at air conditioning, heating and refrigeration equipment distributor Watsco, Inc., had this to say at the Credit Suisse industrials conference on Nov. 30:

But pretty huge inflation bias coming into 2018, we can see the OEMs being very aggressive with price, needing to be very aggressive with price and it's very good for us assuming that price remains in the market for next year, because as a distributor, we pass it through, our gross profit production increases, our fixed costs do not and it's really good for business. 

Could the central banks of the developed world be finally on the cusp of getting their long-desired inflation?  Be careful what you wish for.