Could Covid-19 create a more inflationary future?

Pandemic could be dividing line

Global governments have been caught out by the rapid spread of the Covid-19 virus, and financial markets even more so.

Although stimulus efforts from governments and central banks have had a positive impact, with the peak of infections yet to come, a deep recession is likely and will significantly impact businesses. One question worth exploring is whether we are heading for an inflationary or deflationary environment following these extraordinary stimulus measures. UK inflation fell to 1.5% in March as oil prices plunged on the back of a perfect storm of low demand and high supply, while a weakened economy on lockdown is likely to push inflation down further in the short term. Yet over the longer t...