Portfolio Perspectives from the CIO Office: May 2024

Inflation continues to be sticky in Australia and the US. How sticky will inflation be from here on in?

In this month’s edition of Portfolio Perspectives, the key messages for investors are:

  • Inflation continues to be sticky, but how sticky it is from here is now in focus.
  • A recent IMF paper examining the historical record of inflation provides a good framework to consider how much longer will inflation remain “unresolved”.
  • Inflation took, on average, three years to be “resolved”
  • The US and Australia have now exceeded the average duration to successfully normalise inflation.
  • Wage growth remains well above levels associated with normalised inflation.
  • Australia also suffers from robust, broad money supply growth which will likely further expand following the Stage 3 tax cuts.
  • A resolution to the current bout of inflation seems further away in Australia than in the US.
  • Lonsec sees no rate cuts by the Reserve Bank of Australia in 2024.

To access the full Portfolio Perspectives for May 2024, download the PDF here, along with the charts & commentary. 

You can also listen to the Portfolio Perspectives podcast on Spotify or Apple Podcasts.


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