4 factors driving inflation and what it means for investors
By Kirsten Hastings, 13 Feb 18
Inflation has been conspicuous in its absence since the financial crisis, in spite of the significant stimulus injected into many of the world’s major economies, according to Robert Lea, head of global equity research at Ashburton Investments.
What are the implications for investors?
“Although equity market performance is normally relatively unaffected during the early stage of a rate tightening cycle, the lift-off in rates is usually seen as a sign of a central bank’s confidence in the strengthening economy,” Lea explained.
“This improving economic growth outlook is theoretically positive for equity markets, as it indicates potentially higher levels of corporate profitability in the future. It also benefits confidence, both at the corporate and consumer levels, as individuals and businesses are more likely to invest when the economic outlook is improving.
“While all these are positive factors, we cannot ignore the fact that equity markets have run hard since the beginning of 2016 and a lot of the good news is already priced in.”
Tags: Ashburton | Inflation | Investment Strategy
