Man Group Predicts New, More Volatile Inflation Regime
Man Group anticipates a shift to a new era of persistently higher and more volatile inflation, moving away from the stability of the past four decades.
Investment firm Man Group PLC has stated that the global economy has entered a new inflation regime, characterized by persistently higher and more volatile price increases. The firm believes the four-decade-long period of stable inflation has concluded.
Teun Draaisma, portfolio manager at Man Group's Man Solutions, and his team have spent five years developing a quantitative investment framework focused on inflation. Their analysis suggests that current inflation levels, the highest in decades, are not temporary but signal a long-term structural shift. Their research draws on historical patterns, indicating that inflation environments are persistent and their extremes often prompt significant policy and economic changes.
Draaisma outlines several factors supporting this outlook. These include high debt levels, increasing global inequality, and the need to repair fragile supply chains. Additionally, he points to tighter monetary policies, efforts to address inequality and climate change, and trends toward deglobalization as inherently inflationary.
Man Group's assessment diverges from the prevailing market consensus, which generally expects inflation to moderate soon. The firm forecasts US inflation to be around 6% by year-end, approximately one percentage point higher than consensus expectations. Man Group is developing investment strategies to navigate and protect against the fluctuations of this new inflationary environment.