Positioning your portfolio against higher inflation

AN inflationary world appears to be a distant memory; it is a scenario which many market observers have dismissed. Inflation has been on a downtrend since the Great Inflation of the 1970s that drove interest rates and equity prices up. Since the 2008 Global Financial Crisis (GFC), central banks have been battling disinflation or outright deflation.

Fast forward to 2020, the "war against deflation" reached a climactic point when central banks pulled out all the stops in their policy toolkit to rescue economies from the fallout resulting from the Covid-19 pandemic. Allow me to put this into perspective.

In March 2020 when the World Health Organisation declared Covid-19 as a global pandemic, the US Federal Reserve (Fed) bought US$3 trillion of assets in just three months (compared with US$2 trillion of assets over three years during the GFC).