For Steven Major, HSBC Holdings Plc‘s Global Head of Fixed Income Research, renewed speculation over an inflation resurgence is a movie he’s seen often.

“Why is it, every year, we start with this reflation theme?” he told Bloomberg Television last week. “There is this perennial optimism, somewhat fallacious in my opinion, that gets found out very quickly.”

Fabrizio Pagani, an analyst at Muzinich & Co Inc. in London, is similarly doubtful.

“Particularly with commodities at such a low price, it would be really, really flabbergasting if we have a sudden inflation pickup,” he said in an interview on Tuesday.

But there will be surprises, and exceptions. In China, the coronavirus outbreak sent inflation to an eight-year high last month as transport disruptions boosted food prices. Norway recorded an unexpected price surge in January.

Czech policy makers raised their interest rate last week -- possibly the only increase anywhere so far this year -- to try to bring consumer prices under control. Sweden’s Riksbank engineered an exit from subzero borrowing costs at the end of 2019, deeming inflation there to be strong enough.

Some investors are sticking to their view that faster price growth will return more widely, just not immediately.

“We don’t see inflation in the near term -- we think that globalization and technology are going to keep Phillips curves flat,” said Nicola Mai, a portfolio manager at Pimco. But “because of fiscal activism and central banks really preferring higher inflation to lower inflation, we think over the medium-to-long run, we could have a resurgence.”

What Bloomberg’s Economists Say

“The underlying hiring trend is robust, providing a sturdy foundation for domestic growth. However, this is due to be challenged in the relatively near term by weak global growth in general and coronavirus supply-chain disruptions in particular.”
-Carl Riccadonna, Yelena Shulyatyeva and Eliza Winger. 

This story provided by Bloomberg News.
 

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