Click on chart to enlarge, courtesy of BNP Paribas.Chart 7 refers to research by the IMF and our own work. We looked into the response of equity markets to rising inflation rates from 1965. This study suggests equity returns become negative when inflation exceeds 6%. The equity market’s optimal inflation rate is 3%. Higher or lower inflation rates are counterproductive.
Friday, February 11, 2011
Inflation Can Be Equities Killer
Simple as it gets from economists at BNP Paribas today (see the chart below):