Stagflation: Livin’ in the ’70s

October 15, 2021

Writing for the FS Super journal, our investment strategist Stephen Miller shares his thoughts about inflation in the current environment.

It is sometimes said that those who remember the ’70s didn’t really ‘live’ them.

It is true to say that as culturally innovative as the ’70s were, it was an economically convulsive decade. Those of us that do remember it are (overly?) haunted by the spectre of stagflation: weak activity growth, high unemployment, and high inflation accompanied by languid equity and bond markets.

In that context, looking at some of the commentary from key central bank chiefs, I sometimes wonder whether they could do with a bit of a memory prompt.

Key central bank chiefs have stuck to the “transitory” inflation narrative even if it has been more persistent than they had forecast. By and large, bond markets have been accepting of that narrative, albeit with indications of rising levels of anxiety.

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