Bank of America Global Research discusses its reaction to today's US CPI print for the month of June.
"We have been writing about transitory and persistent inflation throughout this pandemic, recently introducing the BofA US transitory inflation meter that showed transitory inflation at historically elevated levels. The bad news is that we are still not out of the woods, as core CPI and core PCE % yoy inflation are likely to remain elevated through yearend and into early 2022," BofA notes.
"The good news is that we are likely near the peak, at least for the next few months, as base effects are less favorable and shortage pressures rotate away from goods towards services. There is even risk that transitory inflation turns into transitory disinflation if there is a negative payback over the next year, which could impact inflation expectations and views around the Fed," BofA adds.