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A falling inflation rate removes an obstacle to further reductions in interest rates when the Federal Reserve's policy makers meet again in October.
See articleOne factor behind Britain's falling inflation rate is the plummeting oil price, which has reduced the cost of petrol for motorists.
The falling inflation rate should help mute complaints from the Bundesbank, Germany's central bank, that E.C.B. measures pose a risk to price stability.
Lost in the cacophony are the declining budget deficit and a falling inflation rate -- largely ignored by investors still doubtful about South Africa's future, despite the country's sounder economic fundamentals.
The Fed is also watching the falling inflation rate and will keep buying bonds if that indicator falls to a level that it thinks will weaken the economy and financial system.
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In their advertisement, the business leaders complain that little has been published about falling inflation rates, the thousands of new houses built or the 412,000 telephone lines installed in the fiscal year 1999 to 2000.
The bond market had its best week in years, the stock market eked out small gains and the dollar fell sharply after the Federal Reserve's surprise announcement that it was worried that continued economic weakness could convert falling inflation rates into a bout of deflation.
But it is worth noting that falling inflation rates are now making real bond yields positive again; food for the many bond bears to ponder.For workers, they may not be getting much of a pay rise but at least the squeeze on real wages may be easing.
With the continent's falling inflation rates, fund managers expect returns of as much as 30% to 40% for southern European countries.
Rain Newton Smith, director of economics at the CBI employers' group, said: "With falling inflation rates and subdued earnings growth, we do not see the first rise in interest rates happening any time soon.
But the markets do not think they can or will: hence those falling inflation-rate expectations.
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