Talking Point  

Inflation decrease of 4-5% this year is 'achievable'

  • Understand the outlook for bonds
  • Explain the opportunities this presents to investors
  • Explain the challenges this presents to investors

A reduction of 4-5 per cent in inflation this year is achievable, however it will be difficult to hit the central bank target of 2 per cent, Rajeev Shah, global credit strategist at Schroders, says.

During an interview with FTAdviser, Shah also said there are signs which indicate that a recession is avoidable.

Shah says: "The yield curve has been a great indicator of recession. It is basically telling us we should be going into the recession as of now.

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"But it’s interesting the economist professor Harvey Campbell commented recently that it could be a different dynamic at play."

Using his model, when the yield is inflation-adjusted the shape of the curve indicates that a recession is probably avoidable.

Another way to put it, Shah explains further, is from a macro perspective.

He adds: "The labour market is in a very different shape. We think it is a complex dynamic that has taken place, particularly post Covid, whether there are labour shortages across different global regions.

"And under this regime it is difficult to see a recessionary outcome and probably, there are elements of  quantitative easing (QE) suppressing the curve."

Additionally, recent economic data is not indicating any signs of a recession or any stress within any sectors of any economies, whether that is in the UK or the US.

Speaking to Ima Jackson-Obot, deputy features editor at FTAdviser, Shah discussed the outlook for bonds and the challenges and opportunities it presents to investors.

The video is worth 30 minutes of CPD.


Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. True or false, Rajeev Shah says when it comes to corporate and government bonds they have seen a bout of volatility which he says is healthy.

  2. Under a soft landing scenario, which of the following are some of the events that are likely to take place?

  3. True or false, Rajeev Shah under a no-landing scenario it is still possible to get low single-digit return over the next year.

  4. What are some of the factors that makes Rajeev Shah comfortable with corporate credit?

  5. What are the main areas of credit that Rajeev Shah is optimistic about?

  6. True or false, emerging market central banks reacted slower than developed central banks to inflationary prices.

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  • Understand the outlook for bonds
  • Explain the opportunities this presents to investors
  • Explain the challenges this presents to investors

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