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Do we need to worry about Inflation?

Do we need to worry about Inflation?

 

It doesn’t seem too long ago that one of the main economic concerns we had was deflation. In the UK this has not been a phenomenon that we have had call to worry about in the past. We have had short periods of falling prices, but not at a level that has caused concern to economists or The Bank of England.

These concerns have now been replaced by inflation. Inflation, if kept at low levels, is regarded as a good thing, and the main developed nations have done a pretty good job in controlling it since the early 80’s. However, that could bring its own problems, as the control of ‘excessive inflation’ isn’t something that developed economies have recent experience of, as it is over 25 years since it was an issue!

The whole Quantitative Easing (QE) experiment has changed the landscape, so what may unfold could be difficult to manage. It is this unpredictability that can have an impact in global stock markets, as they do not like uncertainty or surprises.

Our approach to combat these inflationary threats and uncertainty, is to make sure that we create well diversified portfolios, by spreading client money across different geographical locations and asset classes. We have recently introduced Gold & Silver funds to our client portfolios, as these can act as a counterbalance to equity holdings, and act as a further diversifier.

We wouldn’t be surprised to see some jitters in stock markets, not just because of inflationary worries, but because there are still issues relating to currency weakness, Brexit negotiations etc. We feel that regardless of what transpires, we can help clients navigate a path that can take advantage of these short-term disruptions and use them to boost long term growth potential.

This entry was posted on January 31, 2018