“I want to deplore our level of yields which is very low, pathetically low”
Gideon Gono, head of the Zimbabwe Central bank, September 21, 2005
“The fact that yields haven’t risen now, I think, does to my mind hold out the prospect that it is possible to put in place a proper framework for fiscal consolidation, for us to pursue our monetary strategy without dramatic consequences for bond yields.”
Mervyn King, Bank of England Governor, November 11, 2009.
Now bring forth Old Mutual bond-fund manager Stewart Cowley and head of global fixed income at Schroders, Nick Gartside, both of whom, according to Citywire, are warning that a scary rate of inflation will inevitably hit Britain soon.
Specifically, Cowley told Citywire (our emphasis):
‘We are going into a Weimar Republic-type of inflation – get used to it,’ he warned. ‘We have got to start showing a sense of financial discipline which haven’t seen for a generation.’
Meanwhile, Gartside said:
‘Inflation’s like pregnancy: you’re never a little bit pregnant. What policymakers have done is deliberately create the conditions for inflation.’
Ah, how we love the inflation or deflation debate. Especially when bond fund managers are involved.
Related links:
Krugman gets tetchy – FT Alphaville
Deflation dead and deader, Federal Reserve style – FT Alphaville