If asset prices are adjusted in response to further monetary tightening, attention needs to be paid to the risk of the U.S. economy decelerating. Moreover, given the global interconnectedness of asset prices, the possibility of worldwide adjustments in such prices also warrants attention. Lastly, Europe, like the United States, is facing elevated inflation.
Unlike the United States, however, such inflation is largely attributable to the impact of the surge in natural gas and other energy prices reflecting the situation surrounding Ukraine. That said, if a wage-price spiral takes place, this will likely cause a sizable increase in medium- to long-term inflation expectations and high inflation could become chronic.