Partner Insight: Is 'Spikeflation' on the cards after rate cut?

The Bank of England cut interest rates to 5% in August – the first cut since the start of the pandemic in March 2020. However, the general sentiment is that higher interest rates will be with us for a while yet and, what's more, ‘spikeflation' could become a significant concern for advisers.

But what is ‘spikeflation' and what can advisers do to deliver good outcomes in uncertain times?

According to Royal London's Trevor Greetham, 'spikeflation' is when inflation surges due to factors like geopolitical uncertainty and disruptions to the fossil fuel supply. This can be a difficult economic environment for advisers to navigate.

There are numerous models that Greetham's team uses to inform their investment decisions in the age of ‘spikeflation', but Greetham – head of multi asset at Royal London Assest Management – highlights the Investment Clock in particular – which links asset class rotation to the global business cycle, allowing the Multi Asset team to use growth and inflation indicators to ‘tell the time' and inform where portfolios should be positioned at a given moment.

Click to read more about navigating multi-asset allocation in amidst changing market economics in Professional Adviser's Spotlight.

*DATA PROTECTION STATEMENT: Your privacy policy – Please read carefully.

We set out below how and the basis under which we, Incisive Media*, will communicate with you. In our Privacy Policy we explain how we may use your data. For subscriptions, events, sponsored content and resources, we will use the lawful basis of 'legitimate interests' and we will use the contact details supplied to us to market to you regarding your trial or subscription, reader research, events and other related products. You will always be offered the option to change your contact preferences. Where you request a whitepaper or content published by one of our third party partners or attend a sponsored event which Incisive Media hosts, we will identify the third party or sponsors to you at the time and then pass on your contact details to them. They will contact you directly and their use of your data will be governed by their own privacy policy. Events may attract additional sponsors after bookings have opened and after the date you have signed up to attend, but we will identify all sponsors to you by email before the event.