Inflation

The pound has gained against the euro ahead of Wednesday's Bank of England inflation report, which is expected to show inflation has hit over 4%, increasing pressure on the Bank to cut rates.

Sebastian Lyon has warned volatility will increase on his £894m Trojan fund as higher inflation and falling wages impact the markets.

Fidelity is changing the investment parameters of its £182m Fidelity Global Inflation Linked Bond fund, allowing manager Andy Weir to reduce average duration.

Inflation will stay "stubbornly high" this year, pressuring the Bank of England to up interest rates from the second quarter, according to the Confederation of British Industry.

Inflation-linked gilts are "very attractive" as a defensive allocation in portfolios, despite low real yields, says Chris Iggo at AXA Investment Managers.

Raising interest rates too fast this year in an attempt to stem inflation would be the ‘ultimate policy error', says Caspar Rock, CIO at Architas.

BILL MOTT ON INFLATION

The UK and US are 'lying' about rising inflation, while most other governments around the world acknowledge this is happening, says Jim Rogers.

The first quarter of this year should see strong growth following the shock 0.5% UK GDP fall in the fourth quarter of 2010, says Rupert Watson, asset allocation strategist at Skandia Investment Group.

Inflows into emerging markets could see a short-term pause as investors consider the impact of inflation in China and other macro issues, says Schroders' CIO Alan Brown.