Why high inflation matters for financial markets

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High inflation is one of the most disruptive forces in financial markets. Persistent increases in consumer prices affect interest rates, asset valuations, investor expectations, and central bank policy decisions. Unlike short-term economic fluctuations, inflation alters the fundamental pricing of financial assets.

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Financial markets react not only to the level of inflation but also to how persistent it is and how central banks respond.

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High inflation can reshape investment strategies, increase volatility, and trigger major reallocations across asset classes.

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This section explains how high inflation impacts financial markets and why its effects are often broad, long-lasting, and difficult to reverse.