SOURCE: Barclays Capital

June 26, 2008 11:26 ET

Inflation Risk the New Global Challenge, Says Barclays Capital

NEW YORK, NY--(Marketwire - June 26, 2008) - Barclays Capital, the investment banking division of Barclays Bank PLC, today said in its latest quarterly "Global Outlook: Implications for Financial Markets," that inflation risk has rapidly replaced credit risk as the predominant issue facing the global financial markets. The effects of higher inflation are poised to work through the global economy in profound ways for the remainder of the year.

"With firm global growth and strong commodity prices, we expect inflation to resist returning to the low levels that policymakers had grown accustomed to at the start of the current economic cycle," said Larry Kantor, Head of Research at Barclays Capital. "We are recommending that investors buy inflation protection in specific areas of the market that still offer value."

Major Themes of Barclays Capital's Economic and Financial Market Outlook include:

--  Global inflation risk is growing, even as the global policy response
    picks up steam
--  The extraordinary rise in commodity prices is not a flash in the pan,
    and will have more impact on the global economy than many are anticipating
--  Emerging markets, particularly in Asia, are facing the worst of the
    inflation surge
--  Tighter liquidity and more expensive credit will linger and exert a
    drag on spending in the US and Europe for some time

This research publication provides an economic assessment of all the major economies and spells out the likely implications for global financial markets, including fixed income, foreign exchange, commodities, credit and emerging markets. This quarter's publication also explores how market participants can navigate the markets in a rapidly changing economic and political landscape.

About Barclays Capital

Barclays Capital is the investment banking division of Barclays Bank PLC which has an AA long-term credit rating and a balance sheet of over £1.2 trillion (US$2.4 trillion*). With a distinctive business model, Barclays Capital provides large corporate, government and institutional clients with solutions to their financing and risk management needs. Barclays Capital has offices in 29 countries, employs over 16,200 people and has the global reach and distribution power to meet the needs of issuers and investors worldwide.

For further information about Barclays Capital, please visit our website

*US$ figure was derived using the US$/£ exchange rate at 12.31.07 of US$2.00/£1

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