One of our core themes over the last few years has been that the inflation regime has changed following the pandemic. It has flipped from a frictionless supply-side world to one where friction has been introduced and inflation will be slightly higher, on average, and more volatile than in the past. This shift has enormous implications for economic growth, central bank policy, and investors. For equity market investors, we believe one of the key implications will be a renewed focus on valuation (a shift from growth to GARP) and a growing preference for quality stocks. In this Economics Weekly, Richard de Chazal lays out the details of what we think this new inflation regime will mean for investors.
