PMC

Inflation

For many regulated businesses there is a direct and statutory link between inflation and the price that customers will pay. Even for non-regulated companies there is often an economic link between the price of its product or services and general price inflation.

While interest rates and inflation are closely related, government and monetary policy often leads to a ‘disconnect’ between them. There are market instruments that hedge this ‘basic risk’, but an understanding of the instruments and the economic drivers that influence their prices is vital.

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