Deutsche Bank explains why inflation risks are still rising into 2025.

Deutsche Bank analysts warned in a note Wednesday that inflation risks continue to rise heading into 2025, driven by several structural and recent trends.

Despite the prevailing belief that inflation will return to target levels, Deutsche Bank (ETR: DBKGn) highlights persistent upward pressures that could lead to further inflation spikes.

“Central banks have eased policy over recent months and money supply growth is accelerating,” said the bank’s analysts.

They explain that this shift coincides with higher global tariffs and other inflationary data, signaling potential inflationary pressures.

“Meanwhile, several central banks have adjusted their mandates in a more dovish direction in recent years, with moves like average inflation targeting from the Fed,” adds Deutsche Bank.

Fiscal pressures are also said to play a significant role. Governments continue to spend on critical areas such as aging populations and defense, further fueling inflation risks.

Deutsche Bank emphasizes that the unique low-interest-rate environment of the 2010s, influenced by the aftermath of the Global Financial Crisis (GFC), was an anomaly.

“Ultimately, there still hasn’t been enough of a realisation that the environment of low interest rates and inflation during the 2010s were historically unique, reflecting the unusual circumstances in the aftermath of the GFC,” wrote the bank.