25th February 2011
However Schroders chief economist and strategist Keith Wade also believes that while there is an inflation risk, the global ‘sweet spot' should continue with the firm still committed to risk assets as a result.
Wade says: "The global sweet spot is the stage of cycle where economic growth is quite strong but there isn't any inflationary pressure coming through, so that means that growth can continue. That is very good for markets because it means investors can look forward to a sustained period growth and increasing earnings."
Wade says that commodity prices represent a threat to this sweet spot. However in the US, Europe and Japan there is enough spare capacity and little pressure on wages so that should mitigate the inflation threat. The manager is more concerned about emerging markets.