Relationship between equity returns and inflation

CFA Level III
#1

Hi all,

In section “Applications of Economic Analysis to Portfolio Management” of the CFAI online practice questions, I saw a solution saying “below-average inflation would likely cause equity to outperform but have neutral effect on bonds”

Does anyone know how below-average inflation impacts on equity returns and bonds?

thanks in advance.

#2

Thats 2009-2014. Getting out of the recession, economy slowly kicking back in, stocks up

#3

thanks for the reply.

I thought about how inflation impacts on different asset classes leaving all others the same.

I just went through the curriculum reading and it makes sense when I think about how the economy flows.