The global economy: The perils of falling inflation

Posted: November 7, 2013 in economy
Tags: , ,

UK Only Article: 
standard article

Issue: 

Little England or Great Britain?

Fly Title: 

The global economy

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In both America and Europe central bankers should be pushing prices upwards

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20131109_LDP002_0.jpg

WHAT is a central banker’s main job? Ask the man on the street and the chances are he will say something like “keeping a lid on inflation”. In popular perception, and in their own minds, central bankers are the technicians who squeezed high inflation out of the rich world’s economies in the 1980s; whose credibility is based on keeping it down; and who must therefore always be on guard lest prices start to soar. Yet this view is dangerously outdated. The biggest problem facing the rich world’s central banks today is that inflation is too low.
The average inflation rate in the mostly rich-world OECD is 1.5%, down from 2.2% in 2012 and well below central banks’ official targets (typically 2% or just under). The drop is most perilous in the euro area: annual consumer-price …

via Economic Crisis http://www.economist.com/news/leaders/21589424-both-america-and-europe-central-bankers-should-be-pushing-prices-upwards-perils-falling?fsrc=rss

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