- "The two key global macroeconomic issues investors want to discuss with us these days are 1) how long and how deep the economic downturn will be, and 2) whether inflation is still a threat in the medium-to-long term despite slower growth and lower commodity prices."
- "Our views on both issues have not changed materially – we look for a prolonged period of relative economic stagnation in the G-7 countries rather than a deep recession, and we think that persistent underlying inflation pressures will limit the oil price-induced decline in headline inflation rates that lies ahead. Thus, stagflation is still the name of the game, in our view, limiting the major central banks’ room for manoeuvre on interest rates in both directions."
- "Rather than a deep recession, we continue to expect a prolonged period of relative economic stagnation in the industrialised world – or as in the US, mild technical recessions. No deep recession, no vigorous recovery. With potential growth downshifting, too, and global monetary policy very easy, underlying inflation pressures should remain elevated, despite the coming decline in headline inflation. The uncomfortable mix of no growth but lingering inflation pressures severely limits central banks’ room for manoeuvre on interest rates. Specifically, we continue to think that market expectations of major rate cuts in the euro area and in the UK will be disappointed."
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