Janet Yellen and Mark Carney, the overseers of the US and UK central banks, have made a fundamental mistake in their inflation calculations, according to an economist at Legal & General Investment Management (LGIM).

“Global core inflation seems to have troughed, even in Europe,” said James Carrick. “Our model shows we are on the cusp of a period of rising inflation.”

“QE created job vacancies, but it didn’t create jobs,” said James Carrick, LGIM.Carrick said central banks had “unleashed an arsenal of weapons to fight the threat of deflation” and feared their economies were not yet strong enough to stand on their own two feet.

In fact, Carrick said, inflation was about to rise again, but central banks were using the wrong metric to gauge the crucial economic factor.

“The threat of deflation has diminished,” he said, adding that employment data was key to both his and the central banks’ views—yet he believed he had the right angle.

“The Fed and Bank of England believe there is slack in labour markets, that there are excess workers waiting for jobs,” said Carrick. “Actually, we have spoken to employers who are actively recruiting but cannot find the staff who have the correct skills.”

The large quantitative easing programmes, put in place by the US and UK during the financial crisis, have created jobs, Carrick said. But there has been no micro-managing of the process, which has led to jobs being created that do not fit the skillset of the population or are in the wrong geographical area.

“QE created job vacancies, but it didn’t create jobs,” he said.

Carrick referred to historical data that showed when employers were in the same situation of having a high number of openings but not being able to recruit due to lack of suitable staff, inflation began to rise.

He said the unemployment was structural, rather than cyclical, and pointed to similar periods in the 1970s and 1980s, adding that after the credit crunch the situation was “not surprising”.

Inflation could be the by-product of these events for a chain of reasons, Carrick said, setting out an example using restaurant chain McDonalds.

“In equilibrium, McDonalds has enough staff to meet demand. If demand shoots up, McDonalds has to advertise vacancies,” he said. “The fact it has vacancies is a reflection that demand is greater than supply as demand for burgers exceeds the number of burger flippers. Management should be more confident of raising prices.”

He also added that staff may be more demanding of higher salaries in this case, which would in turn push up prices to the consumer.

Update: European Central Bank President Mario Draghi has this morning announced an unexpected cut in the main interest rate for the eurozone to 0.05%. The deposit rate has been cut to -0.2%.

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