Reference no: EM133114389

As a financial planner/investment advisor, you are expected to meet your client/friends to discuss many hot topics/financial news. Just recently, one of your best friends and your valued client approached you and discussed the following report about the inflation risk, as quoted in below, please share your views on the risks management of investments due to inflation.

Quote: Federal Reserve Chairman Jerome Powell's retirement of the term "transitory" to describe inflation could have an unexpectedly bleak knock-on effect on risk assets, according to Cole Smead, president and portfolio manager at Smead Capital Management.

Powell surprised markets earlier this week by altering his previously consistent tone on inflation, telling U.S. lawmakers that "it's probably a good time to retire that word (transitory) and try to explain more clearly what we mean."

Inflation has begun to consistently exceed central bank targets, prompting increased speculation that central banks could be forced to tighten monetary policy earlier than expected. Investors have been trying to ascertain where and how the Fed might look to tackle inflation if it concedes that rising prices are stickier than expected.