View more on these topics

Deflation could see return of easing

The Bank of England may be forced to restart its quantitative easing programme.

The Office of National Statistics revealed this week that inflation fell to 3.4 per cent in May from 3.7 per cent in April. Artemis strategic bond fund manager James Foster says deflationary pressures will force the bank to inject more money into the economy in the short term.

He says: “As soon as there is an enormous cut in public spending and more quantitative easing, the private sector would get that artificial prop and could benefit from using the bond markets to grow businesses again.”

Fidelity asset allocation director Trevor Greetham says the Government will want to use quantitative easing to make sure private sector growth continues so the deficit can be reduced. He says: “If there is no inflation, the Government will be panicking. I think easing worked last time, it got assets and the economy moving, and I think we will need another dose of it.”

Neither could put a figure on any possible extra fiscal injections. Foster says: “The effect on sterling may be horrendous but the Government will do it because it can and it will have to.”


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm