NBIM CEO warns of impact of rising commodities on inflation

NBIM's headquarters

The CEO of the world's largest wealth fund says there are many unknowns in financial markets right now, but the "big worry" for investors is what a rise in commodities could mean for the inflation outlook, CNBC reported.

Nicolai Tangen, CEO of Norges Bank Investment Management (NBIM), stated that rising energy and raw material prices could be a "headache" for major central banks that are still combating inflation.

“So, if energy and raw material prices continue to move up, that is going to feed through to end-product prices, which are going to be higher. And that could be the real wildcard when it comes to inflation expectation,” Tangen said.

Tangen’s comments come as oil and copper prices have risen by almost 13% since the beginning of the year, with gold also reaching fresh highs in recent months.

The NBIM continues to believe that central banks will struggle to bring inflation down to target levels and that major central banks will respond differently depending on domestic inflationary pressures, he added.

Tangen cited several factors that are currently driving inflation, including geopolitical tensions, the climate impact on food through worldwide harvesting, and some changes in trading routes.