Is global reflation priced in?
Reflationary sentiment in markets is extreme, suggesting that investors should be cautious about chasing cyclical assets and inflation hedges. Continue reading
UK inflation forecast update
An article in November presented a “monetarist” forecast of a rise in UK annual CPI inflation to 3.2% in Q4 2021, far above the Bank of England’s central projection of 2.1% (reduced to 1.9% in February). News since then has been consistent with the assumptions underlying the forecast, which is maintained. Continue reading
Monetary deficit finance and medium-term inflation
G7 headline consumer price inflation will spike in H1 2021, possibly reaching 3-4%, which would mark a 13-year high. Central banks will portray the rise as a temporary blip but the “monetarist” view is that higher inflation is related to the 2020 broad money surge and will be sustained into 2022. Continue reading
Reflation optimism at risk of near-term disappointment
Chinese money trends have been signalling an economic slowdown in H1 2020. This appears to be playing out but the PBoC has kept policy tight and narrow money growth has fallen further in early 2020. A Chinese slowdown could derail current global reflation optimism. Continue reading