PIMCO: significantly higher inflation ‘a real possibility'

PIMCO has warned the global economy faces the threat of rising inflation, driven partly by central banks using it as a solution to fiscal deficits.

Portfolio manager Mihir Worah says: “Over the longer term, certainly we have to be wary of higher inflation being a ‘solution’ to persistent deficits everywhere. “For over a year now, we have thought that inflation is unlikely to accelerate in the near term, mostly due to substantial slack in the economies of the US and other developed nations. “However, looking further ahead, significantly higher inflation is a real possibility owing first to capacity destruction, and the many unusual measures central banks have taken.” He notes planned rises in VAT across Europe – including a hik...