The musings and pronouncements of central bankers should normally be taken with a pinch of salt. After all any well prepared and researched private investor should be able to understand the effect of wider monetary and fiscal policies on the companies within their own portfolio. Amid much brouhaha this week Fed chair Jerome Powell signaled a shift in emphasis towards allowing inflation to rise, potentially unchecked, as a way to help extricate the US economy from its current rather worryingly deep hole. But inflation can have a corrosive effect on investments if the companies one holds in a portfolio suddenly begin to struggle to grow their cash flows and earnings enough to keep returns ahead of the rate of inflation.
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