Inflation in key economies likely to drop faster than expected – deVere chief

Inflation in most major economies, including the United States, is likely to drop faster than many expect, the head of global financial consultancy deVere argues, citing declining real wages, the slow implementation of monetary policies and “weak” economic growth.

Interest rates would start falling as a consequence within the next year, Nigel Green, deVere’s founder and chief executive, predicts in an article.

There are three key reasons to expect this comparatively rapid inflation decline, he says.

First, real wages are typically going down despite nominal increases, and employers seem to be avoiding raising wages on demand, Green says.

Second, there is an “incredibly lengthy” lag between the moment of approval of monetary policies and their implementation. Interest rate hikes, for example, take about 18 months to come into effect, Green complains.

And third, “although many economies are likely to avoid a full-blown recession, economic growth is still expected to be weak for the foreseeable future”, Green, a financier with a career of three and a half decades behind him, says in his article, headlined “Inflation Likely to Dissipate More Quickly Than Expected.”

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