Why central banks are not hitting their 2% inflation target

Growth and inflation are out of sync in most developed nations, forcing them to carry on with relaxed monetary policies but this may cause bubbles and crises

Since the summer of 2016, the global economy has been in a period of moderate expansion, with the growth rate accelerating gradually. What has not picked up, at least in the advanced economies, is inflation. The question is why.

In the United States, Europe, Japan, and other developed economies, the recent growth acceleration has been driven by an increase in aggregate demand, a result of continued expansionary monetary and fiscal policies, as well as higher business and consumer confidence. That confidence has been driven by a decline in financial and economic risk, together with the containment of geopolitical risks, which, as a result, have so far had little impact on economies and markets.

Continue reading…

Tags:

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Post