The Inflation Risk Online Debate has ended with the consensus that while inflation may be on the rise, the short-term forecast is benign or less than 2%.
60% of the participating membership voted in favour of con participant, Terence Yuen, senior economist with Towers Watson and his viewpoint of benign inflation.
Yuen said in his opening statement that “considering the amount of monetary stimulus central banks around the world have injected into the financial system, it is not surprising that inflationary concerns are starting to emerge,” and that “assessing the risk of “severe” inflation in Canada is implicitly asking whether the Bank can keep inflation under control.”
Andrew Spence, global head of rates and foreign exchange with TD Securities, warned members that “as governments determine how best to withdraw all the money they pumped into the system, many economists believe that sooner or later, there’s got to be a big upsurge.”
Spence also said “today’s inflation risk is the biggest since the 1980’s, and once clear of today’s dis-inflationary slack – in 2011 and beyond – inflation could well reach above 3%.” Certainly something for plan sponsors to consider.
The next Online Debate will launch on Tuesday, May 4 on currency management and whether or not active management offers the best value for pension portfolios. Stay tuned and visit www.cirdebates.com to join!