Inflation: The price is a blight

Posted: November 8, 2013 in economy
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UK Only Article: 
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Little England or Great Britain?

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The rich world, and especially the euro zone, risks harmfully low inflation

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WHEN central banks adopted “quantitative easing” (printing money to buy financial assets) and other unorthodox means to buoy economies holed by the financial crisis, many feared that the result would be out-of-control inflation. Asset prices have certainly soared. But consumer prices have not. Indeed, the growing fear is that rich countries may be entering a twilight zone of ultra-low inflation.
A downward lurch has been most notable in the euro area, where annual inflation dropped from an already low 1.1% in September to 0.7% in October; a year ago it stood at 2.5%. It is now a percentage point lower than the European Central Bank’s inflation target of “below but close to 2%”. The ECB lowered its main policy rate to 0.5% in May; on November 7th its governing council, responding to the …

via Economic Crisis


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