Developed-market inflation expectations diverging - Nathan Sweeney

Architas advent calendar - 19 December

clock • 1 min read

Developed markets are now seeing different levels of inflation expectations with the US at the top, the UK in the middle and Europe at the bottom, says Architas senior investment manager Nathan Sweeney.

Speaking in the above video, which continues Professional Adviser's Architas Advent Calendar counting down to Christmas, Sweeney suggests the reversal in the oil price seen over the course of 2016 could feed through into inflation figures, supported by the fall in sterling.

In this environment, product-producing companies will have to increase the sales price of their product to compensate for the added cost of importing their goods into the UK, he adds.

Sweeney goes on: "The good thing about that inflation is it's only expected to be momentary and the inflation figures are expected to run off as we move forward."

This is very different to inflation expectations in the US, he suggests, explaining: "Donald Trump is talking about fiscal stimulus, tax cuts and infrastructure spending. These could lead to inflation that persists and lasts for longer as you see more sustained growth coming through in the US."

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