Assessing the longer-term risks stemming from public sector indebtedness

Eurozone inflation eased back to a rate of just 1.1% in February. As in the US, there is some indication of a modest pick-up in wage growth, and this has in the past been closely associated with the rate of inflation in the service sector.

The key issue is how robust such an increase in wage and service sector inflation proves to be and whether inflation will move back up towards its target of 'less than but close to 2%'.  Investment Conundrums: Neptune's Geffen and Dowey warn things could 'get ugly' in the UK The European Central Bank's (ECB) own projections show this happening only gradually, with the average rate at 1.7% in 2020. To avoid risking growth in a subdued inflationary environment, monetary stimulus by the ECB will likely be phased out only gradually. The juggling act of meeting demands for higher gov...