The federal government's coronavirus response risks spiking inflation

Why it matters: Inflation not only increases the cost of goods and services, but it could force the Fed to raise interest rates before the economy has recovered, depressing growth as the U.S. starts to emerge from the coronavirus-induced recession.

The pandemic is currently choking off growth and inflation, but once nationwide lockdown orders are removed, the unprecedented action could spark inflation levels not seen in a generation.

Flashback: Many feared inflation would flare up when the Fed unveiled quantitative easing to battle the global financial crisis in 2008, and it never happened.

That may have provided policymakers a bit of false confidence, warns David Kelly, chief global strategist at JPMorgan Asset Management, and could “give us another opportunity to ignite the inflation bomb.”