Banks find ways to play the price as inflation rises

摘要

Central banks may be squirming as inflation expectations continue to rise, but Philip Alexander finds bankers are getting comfortable with their clients' efforts to protect themselves against higher prices. Dariush Mirfendereski, head of inflation-linked trading at UBS investment bank, has left his screen with some trepidation. Market conditions are wild, in every sense. He has just watched market-implied rates of inflation for the UK hit new highs for the year - and indeed for the entire period since the Bank of England became independent in 1997. "In the past three or four months we've been busier than ever, in terms of enquiries and trades," he says. And as inflation risk increasingly finds its way out of esoteric financial modelling and on to the front pages of the mainstream press, demand for inflation-linked products is spreading beyond traditional buyers.