Recent developments have reinforced our view that, although headline inflation will continue to rise in the coming months, it is likely to peak before the end of this year in both advanced and emerging economies. The momentum behind global growth has slowed again even before policy stimulus has been fully withdrawn, and the rally in commodity prices now seems to be reaching an end. We expect a combination of anaemic growth, high unemployment and fiscal consolidation to lead to significant disinflation during 2012, despite monetary policy remaining very loose.
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