The recent slowdown in economic momentum - which saw yield levels falling steeply across most major western economies - indicates a significant risk of deflation, it has been argued.
Tim Drayson, economist at Legal and General Investment Management, observed that concerns are mounting that several economies might be about to experience another financial crisis.
However, he explained that while economic growth is likely to be slow, deflation should be avoided.
"Central bankers are convinced they have the tools to avoid deflation, although there is disagreement over exactly how QE works and the magnitude required in order to achieve their objectives," Mr Drayson explained.
"This could take the shape of lower borrowing costs, boosting bank reserves, raising asset prices or through increasing inflationary expectations."
Meanwhile, Legal and General is currently offering £100 cashback to Britons transferring their existing Isas to the provider during the month of September.
Deflation should be avoid, claims investment expert
Deflation should be avoid, claims investment expert
Thu, 16 Sep 2010
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