How investors learned to live with inflation

The Federal Reserve's preferred measure of U.S. inflation never fell to its 2% target, bottoming at 2.3% in April 2025, then rising to 4.1% in May 2026.

In Bank of America's latest monthly survey of fund managers, 54% expected 'no landing' for the global economy, meaning persistent inflation and growth.

University of Michigan survey respondents expect inflation of 4.2% over the next year and over 3% over the long run, with inflation not below 2% since early 2021.

Energy prices rose since February 2026 when America and Israel began bombing Iran, worsening inflation, but the core issue is sustained above-target inflation.

Investors and consumers expect above-target inflation to persist, with central bankers failing to bring it back to target.