Barclays Poll Shows Deflation Bigger Threat Than Inflation

Despite trillions of dollars in monetary stimulus unleashed by major central banks in recent years, investors see deflation as a bigger threat than inflation over the next 12-24 months, according to a new survey.

Over 60 percent of the 912 global investors polled in Barclays’ Global Macro Survey view downward price pressures as a greater risk than inflation.

Deflation fears are reflected in investors’ outlook for gold, which is typically used as a hedge against inflation.

Around 25 percent of investors expect gold to fall below $1,200 an ounce by the end of the first quarter of 2014, while another 25 percent or so expect it will trade between $1,200 and $1,250, the survey showed. The yellow metal is currently trading at $1,239.

Mounting deflationary pressures in the euro zone, for example, have become a serious concern, prompting the European Central Bank (ECB) cut its benchmark rate to a record low of 0.25 percent in early November.

Euro zone inflation fell to 0.7 percent on year in October – its lowest since November 2009 – triggering worries that the region is at risk of a Japan-style deflationary rut.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza