Investment Conundrums: BlackRock's Simona Paravani on why inflation is 'back in town'

Markets underestimating even 'modest' levels

Investors need to begin preparing for the fact inflation is "back in town", according to BlackRock's Simona Paravani, who warned that "even relatively modest levels of inflation have been underestimated by markets, especially over the medium term".

Paravani, who is managing director and global CIO of solutions within multi-asset strategies at BlackRock, believes that while industry commentators have been discussing the prospect of higher inflation for some time, it has now become a far more likely prospect as markets are simultaneously refusing to heed the warning signs. According to BlackRock's research, the US market is pricing in that inflation will stay below 2% over the short-to-medium term, although she believes somewhere around at least the 2.5% mark - particularly over the next five years - is more realistic. Investment ...