Global inflation has a significant impact on world financial markets, affecting various aspects of the economy. As the prices of goods and services increase, people’s purchasing power decreases, which can result in changes in investment behavior. First, inflation affects interest rates. Central banks in various countries tend to raise interest rates to control inflation. Rising interest rates increase the cost of borrowing for individuals and businesses. This could result in a decline in corporate investment, which in turn impacts overall economic growth. Rising interest rates also make bonds more attractive compared to stocks, which can cause funds to flow out of the stock market. Second, the commodity sector feels the direct impact of inflation. Oil, metal and food prices often increase when inflation is high. This has a positive effect on commodity producing countries, but can be detrimental to consuming countries. For example, countries that depend on energy imports will experience trade balance deficits, increasing the volatility of their currencies. Third, global inflation creates uncertainty in the market. Investors tend to look for assets that are considered safe during periods of inflation, such as gold and real estate. Demand for these assets increases, causing prices to rise. Additionally, this uncertainty often drives increased volatility in the stock market, with investors attempting to adjust their portfolios to changing market conditions. Fourth, high inflation can affect the relationship between currencies. The currencies of countries with low inflation tend to strengthen against the currencies of countries experiencing high inflation. This is reflected in exchange rate movements that influence international trade. Multinational companies must adjust their strategies to minimize exchange rate risk. Fifth, the impact of inflation is also felt by the financial services sector. Banks and other financial institutions may face losses if they cannot adjust their lending and investment products to rising inflation rates. Loan interest rates may increase, while savings products may offer inadequate returns. This can suppress bank profitability and change the dynamics of the credit market as a whole. Sixth, global inflation has the potential to trigger an economic crisis. If inflation is not controlled, it can create stagflation—the middle ground between high inflation and low economic growth. At times like these, financial markets often experience dramatic declines, resulting in huge losses for investors. Finally, the government’s response also plays an important role. Fast and effective fiscal and monetary policies are essential to deal with the impact of inflation. If countries around the world work together to overcome the issue of inflation, its impact on financial markets can be minimized. Thus, understanding this mechanism is very important for investors and market players to adapt their investment strategies in the face of continuing global inflation.