M&G's Bond Vigilantes: Inflation surprises on the horizon

M&G's Bond Vigilantes team has warned of potential inflation surprises on the horizon amid easy monetary policy from central banks. Here, portfolio manager Ben Lord outlines inflation expectations from consumers in the UK, Europe and Asia for both the short and long term.

Despite high unemployment rates, excess capacity and a sanguine inflation outlook from the major central banks, it is important to keep an eye on any potential inflation surprises that may be coming down the line. For instance, we only need to look at ultra easy monetary policy; low interest rates and improving economic growth to see that the risk of an unwelcome inflation shock is higher than perhaps at any time over the past five years. The development of forward guidance measures is a clear sign that central banking has evolved substantially from 2008 in the form of Central Bank Re...