We see value in positioning for higher inflation especially after the oil price has stabilised and as positive base effects will support inflation in end-2015.
The current market based inflation expectation is actually almost consistent with the oil price remaining unchanged at the current level during 2015 and 2016.
Further out on the curve inflation is priced below 2% the next ten years, hence the current pricing suggests the ECB will undershoot its target until 2025.
The attractiveness of now buying exposure for higher inflation follows as market based inflation expectations are mostly driven by changes in commodity prices.
Related to this it is less important that there is downside risk to core inflation for a long time.
Our forecast for inflation is above the forward rates derived from the break-even inflation curve in 2015, 2016 and 2017.
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