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i’m not sure inflation in and of itself would impact it, but maybe the Fed beginning to taper would
Institutional investors monitor inflation carefully, because the central bank typically increases either interest rates (monetary policy) and/or government imposes higher taxation (fiscal policy) to remove cash circulating in the economy to control inflation.
With interest rates, most sources of debt financing is tied to interest rates and with cost of debt financing higher, it generally decreases the appetite for M&A as it is more costly.
Taxation in a similar way reduced appetite for M&A but more unpopular with everyone, not just corporates.