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Strategic Gilt fund manager warns of inflation down the road
Speaking to Bloomberg TV, City Financial Strategic Gilt Fund manager Ian Williams warns that the policies announced by the Bank of England on March 5th risk inflation in the medium to long-term.
- View the Bloomberg TV video
The focus of this new strategy involves the Bank of England buying up approximately £75 billion worth of gilts. This in turn paves the way for the Treasury to flood the market with new gilt issuances. Williams explains that though this may stem deflation now, the swollen money supply will create substantial inflationary pressure once the UK is on the road to economic recovery.
Williams highlights the long-dated segment of the yield curve as carrying the most risk of devaluation in the future. To help limit the exposure to inflation of the Strategic Gilt fund Williams is holding index-linked gilts.