• The market versus the central banks
  • Inflation is rising again
  • Will wage growth be blamed for inflation and deflation?

When it comes to inflation, who do you trust? The financial markets, or the Bank of England governor Andrew Bailey?

It’s a trick question, because the financial markets are just trying to second guess what the Bank of England governor is going to do next, whether right or wrong.

Will he cut interest rates as inflation and the economy turn south, as the markets are betting?

Or will he keep rates dangerously high because the recession is over before we even knew it began? That’s what Bailey is telling us, anyway…

It’s a crucial question for investors, whose stocks are living off the central banks’ largess. But central banks can only open the monetary spigot to rescue stock markets if inflation is low enough.

Unfortunately, it’s turning back up in places like the UK and eurozone. Does that mean rate hikes are on the cards instead of rate cuts, as some central bankers Down Under are warning? And what would that mean for markets pricing in looser monetary policy?

In this video, I ask former investment banker John Butler, the investment director of Southbank Investment Research, who has it right – the market or the central banks?

We also unravel precisely how the central bankers might be walking into a trap of their own making…

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Nick Hubble
Editor, Fortune & Freedom