Inflation risks

Article Abstract:

Low inflation has helped financial markets world wide, but there is no certainty that this will continue, argues JP Morgan. Global inflation has dropped to 3.5% in 1997, due to policies geared to curbing demand. Capacity constraints could lead to higher inflation in the US and UK, though Japan and mainland Europe should see low inflation due to weak demand. Despite this, slack monetary policies could boost liquidity, leading to higher inflation. There may also be public opposition to policies geared to curbing inflation, especially where they are linked to unemployment.

Prices, Economic forecasting, 1997 AD

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US inflation: inflation risks

Article Abstract:

Nat West Markets sees a possible sale of US bonds triggered by concern over rising inflation. Commodity prices are rising as world economic growth revives, and a rise in equity prices and the money supply indicates loose monetary conditions. Wage inflation has tended to be subdued which has helped keep inflation low. Hourly earnings are rising, and wage inflation could become a problem. Investors look set to sell Treasury bills which will lead to a rise in yields in summer 1996.

United States, Government securities

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