Impact of Inflation

Impact of Inflation

Inflation was under 2% for almost a decade. Even during the pandemic with unprecedented quantitative easing, inflation remained low and manageable. Now inflation rises to record high across the world. The impact on the economy and the financial markets are profound. Stock markets becomes volatile and reacts to monthly inflation report.

As a group write a report about impact of the inflation on the stock market. The report needs to cover the following areas:

1. How can central bank manage inflation, specifically, what is the interaction between central bank intervention and general price level in the economy. Is central bank’s action effective at moderating inflation? Explain your answer.

2. Why the financial industry keeps an eye on the CPI (consumer price index) report every month? Are stocks more volatile around CPI report? Why? How inflation reading affect the stock market? Why?

3. Is there any stock benefit from inflation? Please give specific examples and explain why the stock benefit from inflation. 

4. As an investor, what is the best strategy in a high inflation economy?

 

This is a group-based coursework, you can form group of maximum 5 students and minimum of 2 students. The word limit on the coursework is 2,500 words, +-10%.

 

Due to last mintue change of the timetable, the first session did not run. The coursework deadline is therefore extended to 24th November.