Inflation outlook still benign

Despite clear evidence of a pick-up in global growth, some fund managers believe this will not be inflationary and, as a result, are positive on the prospects for bonds. Ian Harwood, strategist at Dresdner Kleinwort Benson, says: "Global growth is picking up strongly and the composite lead indicators we follow suggest that this process has further to run. Unsurprisingly, given the inflationary experience of the 1970s and 1980s, bond investors worry whether current low inflation will last. "Commodity prices, especially oil prices, have jumped sharply while output gaps are beginning to narro...