QE will not fuel inflation in the US, according to Lazar

Ms Lazar, partner at Cornerstone Macro, said the Federal Reserve had avoided the US entering a period of deflation by printing money through QE, and this meant the process was not likely to lead to a sudden spike in inflation.

She said the US had been “facing deflation” in 2008 when the Fed began the first round of its QE programme, but by buying hundreds of millions of dollars worth of government bonds it had “prevented deflation, not created inflation”.

Ms Lazar instead issued a bullish forecast for the US, claiming the country’s economy “has the wherewithal to get to 3 per cent growth” in 2014.

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“Fiscal headwinds for 2014 are going away,” she said. “Spending has been cut by 2 percentage points of GDP – I can’t think of another country with a similar amount of fiscal drag that has still been able to post positive growth.”