Legg Mason subsidiary Brandywine comments on the Bank of England’s quarterly Inflation Report

Regina Borromeo, global fixed income portfolio manager at Legg Mason subsidiary Brandywine, comments on today’s inflation report from the Bank of England: “Today’s Bank of England Inflation Report confirms that the UK is not immune to Euro-areas woes and deflationary concerns. Whilst the UK, along with the US, is leading the way in the developed world, the weakness in Europe is dampening the growth trajectory and inflation expectations.
“There are some gold nuggets in the report however, with the improvement in wage growth and an uptick in confidence providing a boost to the labour market, while real incomes are also supported by lower energy and food prices. In addition rising consumer confidence, particularly at this time of the year, suggests we could see a good holiday season for retailers relative to previous years.
“Overall the report is consistent with our view that we are experiencing a low inflationary growth trajectory, with the shift to higher rates to be more gradual compared to previous renormalization cycles.”