Despite signs that inflation has likely peaked in certain areas of the world, the idea that the global monetary tightening cycle might soon come to an end is misplaced. With CPI levels set to remain at uncomfortable levels for the foreseeable future, inflation mitigation remains key for investors.

Softer than expected inflation data in the United States and China has prompted hopes that the global monetary tightening cycle may soon end. This view, however, is hopelessly optimistic.

U.S. headline CPI eased from 9.1% to 8.5% in July, helped by the recent softening in energy prices. Peak inflation may be behind us, but CPI will remain uncomfortably high as sticky shelter and services inflation continue to put upward pressure on prices. It will be some time before the Fed feels sufficiently comfortable to pause rate hikes.

China’s headline CPI rose from 2.5% to 2.7% in July, lower than expected but its highest level in two years. China’s inflation issue is diminutive compared to the U.S. Even so, rising food prices imply that inflation may rise further over coming months, potentially pushing it above the People’s Bank of China’s 3% target, limiting the space for rate cuts.

Unlike the U.S., Germany’s inflation peak is still ahead. Headline CPI rose from 8.2% to 8.5% in July and the relentless rise in natural gas prices will likely push inflation into double digits later this year. Against that backdrop, even the oncoming Eurozone recession cannot stop the European Central Bank from hiking rates further.

The U.S. outlook is still one of uncomfortably high inflation, China’s inflation problem may be growing, while Europe’s inflation problem is extraordinarily pressing. The need for inflation mitigation has not disappeared.