Tuesday, June 3, 2008
Fears surrounding the integrity of central banks persist
Baring Asset Management is moving to a defensive stance, as fears surrounding the integrity of central banks persist and there are few signs of a quick recovery in global markets. Andrew Cole, director of asset allocation at Barings, says recent inflation statistics have done nothing to quell fears about the medium-term prospects for the British economy. "We have been concerned by rising inflation expectations," says Cole. "We have been expecting a turnaround in the growth/inflation trade-off for the past 18 months and so we hold a negative view on government bonds.""We may wake up one day and question the integrity of central banks, who have taken all this paper onto their books," he says. "Gold is looking cheap by historical standards and could benefit from this uncertainty."