Tuesday, February 20, 2018

BofA Merrill Lynch 2010 Inflation Mild but Gold at 1,500

January 5, 2010 by  
Filed under Smart Money Says

On Dec 14, 2009 BofA Merrill Lynch Global Research projected low inflation, but still expects the price of gold and other commodities to rise substantially.

Ethan Harris, head of North America economics,

expects a further fall in core inflation and projects that the U.S. Consumer Price Index will be 2.5 percent. He feels that the transmission process whereby monetary easing leads to rising prices is currently “stuck in neutral” as banks are rebuilding there balance sheets. He also believes that central banks will have plenty of time to sop up liquidity before inflation becomes a real issue.

Francisco Blanch, head of commodities strategy, expects that commodities will be driven by strong demand in emerging markets. “Crude oil could break $100 per barrel by late 2010 and we’re forecasting gold to top $1,500 per ounce in the next 18 months, particularly if the dollar weakens further against certain undervalued emerging market currencies,” said Blanch.

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