But Jacob Frenkel, vice chairman of insurance and financial services giant AIG, argued that with real interest rates — the central bank rate minus inflation — near negative territory in the US and other major economies, greater inflation was a major concern.
“If you look down the road another year or two it’s very likely that you’ll see higher interest rates,” he said — a development which, in the US, might suppress already anemic consumer spending as well as exports.
The annual gathering at Lake Como is the first since the credit crunch dried up money markets late last summer, leading to turbulence on other financial markets and putting major economies like the US and several European countries, including Britain, on the path to recession.
Billed as a “mini-Davos” after the annual conference held in Switzerland, the event is being attended by leaders including Italian President Giorgio Napolitano, Israeli President Shimon Peres, European Commission President Jose Manuel Barroso and US Vice President Dick Cheney.
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