Inflation

Inflation rose to its highest level since September 2008 last month, reversing the previous month's retreat and breaking sterling's five-day decline against the dollar.

Asian markets are coming under pressure from high inflation, which will prompt a short-term sell-off despite economies in the region thriving, said multi-manager John Husselbee.

Chinese inflation has reached a peak, according to Jupiter's Philip Ehrmann, who also believes monetary policy is likely to become more relaxed in the second half of this year.

Sterling jumped across the board after the Bank of England's latest report said inflation is likely to remain above target for longer, fuelling expectations the MPC will act sooner to tackle price rises.

Bank of England governor Mervyn King has warned the extended holiday to celebrate the royal wedding last month will hurt GDP growth.

Artemis' James Foster said the Monetary Policy Committee should hike interest rates to the same level as those in the eurozone to push up the value of sterling and stem inflation.

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ON EUROPE

Interest rates will be held at the historic low of 0.5% in May as the economy remains muted, according to AXA Investment Managers' Chris Iggo.

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