Perhaps the two most important questions for investors when assessing their expected future asset returns over the medium to longer term are: What's the outlook for real GDP growth, and what's the outlook for inflation? These two macroeconomic variables provide the basis for longer-term asset price returns. With that in mind and given that the theme of recent economic data releases has revolved around the inflation reports, in this week's Economics Weekly, we examine the longer-term outlook for inflation and highlight the two currently competing views as to its future path.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.