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Chatfeild-Roberts: beware inflation 'illusion'
by Emma Dunkley on Jan 07, 2013 at 13:57
‘However in reality, not much has changed from a year ago and markets are still facing several long term challenges,’ he went on to caution.
‘The key issue remains Europe. The single currency will only work if Germany is prepared to pay for it – for a very long time.
‘But we don’t underestimate the desire of European politicians to keep the “European project” intact, at almost any price.’
Despite the effort of central banks helping to boost market sentiment, Chatfeild-Roberts highlights problems remain with their ‘solutions.’
‘Low interest rates are leaving savers (who outnumber borrowers eight to one) making a loss after inflation on cash deposits, and weak companies which should have gone to the wall are dramatically slowing the normal sharp economic recovery that follows a recession,’ he said.
‘Furthermore, while printing money through quantitative easing may support financial markets in the short term, it is potentially storing up an inflation problem for the future.’
Nonetheless, the head of Jupiter’s Independent funds team said the euro has recovered from its lows and with the support of the ECB, he has increased exposure to quality companies in the region, at the margin.
‘We also continue to favour the US, with our focus once again on larger multi-nationals,’ he added.
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