Mott: QE could lead to “serious inflationary problems”
PSigma income fund manager Bill Mott says that QE will not help the economy and means that the Bank of England are less likely to raise interest rates.
Mott says: “More QE, which is after all just electronic money-printing, must reduce the value of the pound. Driving sterling lower in turn means more imported inflation, which squeezes us all further. We don’t think that QE will help at all.”
He says that if inflation was to fall next year, that would reduce the squeeze on the consumer and also bring us closer to the point where the Bank of England could start thinking about ‘normalising’ interest rates. Mott says: “Both look less likely with more QE.”
In such an inflationary environment, stocks like Unilever and British American Tobacco, both in the fund, “do well if the backdrop is more inflationary. Selling everyday essentials is a great inflation hedge.”