Growth and inflation are going to remain subdued, so central banks will keep rates very low, which has serious implications, according to Neil Dwane, global strategist at Allianz Global Investors.
If the lower for longer period of global growth and interest rates does come to an end, David Jane, manager of Miton Group’s multi-asset range, said he would have to restructure roughly half of his portfolio.
Despite a mixed picture for inflation globally, investors remain content to err on the side of the central banks, but something has to give soon.
A vote to leave the European Union would most likely result in a material slowing of growth and a notable rise in inflation, the Bank of England said on Thursday.
With the European Central Bank confirming it is holding interest rates at rock bottom levels, Miton’s Anthony Rayner has posed the question as to whether it is time to turn to a different weapon in the fight to generate some momentum in the eurozone economy.
The ECB’s latest salvo in the fight against the prospect of deflation was initially met positively by markets. But, a lack of a clear message that the Bank will cut rates further from here sent markets falling again almost as quickly.
The FTSE 100 edged back over 6000 on a wave of positive sentiment triggered by the surprise announcement that Japan has moved to negative interest rates.
Markets have welcomed confirmation of the widely expected first interest rate rise since the financial crisis, but all eyes have quickly turned to focus on what comes next.
The Bank of England confirmed today rates will be held steady at 0.5% as widely expected just as data emerged showing a small dip in UK consumer confidence.
Fund managers have responded with equanimity to the UK CPI inflation figures released today, saying the underlying data does not suggest a deflationary scenario.
Conjecture over the timing of the first UK rate rise is becoming almost as routine as the industry’s misplaced adaptation to the ‘abnormal’ 0.5% rate presently in place.
With MPC minutes having today revealed growing concerns about UK inflation it suggests that, alongside rising interest rates, investment strategists are going to have plenty to ponder by the time the summer fades.
