View from the Floor: June 2016

June 2016

Inflation: the underestimated risk?

In the first episode of the Aviva Investors View from the Floor podcast series, Nick Samouilhan, Stewart Robertson and Ed Hutchings consider the outlook for inflation globally and the implications for investment.  

 

For long periods since the global financial crisis, the prospect of deflation in parts of the developed world has been a major concern of investors. So far, however, the extraordinary measures taken by major central banks including the European Central Bank and Bank of Japan seem to have been sufficient to stave off deflationary pressures.

In some quarters, there has even been talk of inflation returning as the global economy tentatively moves towards recovery and the impact of the recent slump in commodity prices dissipates from the inflation numbers. With yields moving into negative territory in many regions, a sharp increase in inflation could have a sizeable impact on investment, particularly fixed income assets; raising questions over whether some investors have become complacent on this issue.

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