Brace for a comeback in inflation and an increase in mortgage rates.

NEW YORK–What else should credit unions potentially brace for in 2021? According to one Wall Street forecaster, a comeback for inflation and an increase in mortgage rates.

Jim Bianco, the president of Blanco Research, said the catalyst for inflation in the new year could be the hundreds of billions of dollars in federal coronavirus aid being distributed as well as  vaccines that will begin normalizing the economy.

"Once you get all of that into the pipeline, you could have a burst of economic activity that could produce higher inflation for the first time in a generation," Blanco told CNBC's Trading Nation. "That's the big worry I have for 2021."

The overwhelming factor preventing inflation from showing up today is the struggling economy, according to Bianco. But he told CNBC the situation is temporary, predicting the demand picture will pick up in 2021 as consumers take advantage of additional stimulus amid an improving jobs market.

Fewer Things to Buy

"You and I and everybody else will have less things to buy with a dollar in a year than we do now, and that will crimp earnings," Bianco said. "That will make mortgage rates go up. That will make borrowing costs go up."

Bianco's expectation is inflation would run a half percentage point above the Federal Reserve's target of 2%.

"That doesn't sound like a lot, but that would still be about a 28-year high — 2.5% core inflation and something that virtually no one has seen," he told CNBC. "We haven't seen inflation in a generation, so a lot of people forgot what it looked like."