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One big (and pleasant) surprise has been the way in which ultra-easy monetary policy has not led to an increase in current inflation, though it has inflated asset prices.
By James Surowiecki September 8, 2009 My column this week is about the curious fact that we've seen a resurgence of inflation fears even though the economy is still struggling and even though there's no sign of price pressure either in current inflation data or in more forward-looking numbers (like the yield on the ten-year bond).
My column this week is about the curious fact that we've seen a resurgence of inflation fears even though the economy is still struggling and even though there's no sign of price pressure either in current inflation data or in more forward-looking numbers (like the yield on the ten-year bond).
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All figures are denominated in current (inflation-adjusted) United States dollars.
The topic of the second half is the role central bankers play in the current inflation.
Adam Marshall, the director of policy at the British Chambers of Commerce, said: "In recent polling, 60% of chamber members supported an increase in line with current inflation, and 14% favoured an above-inflation increase.
That, in turn, will boost current inflation.
(The current inflation in commodity prices is due to other factors, as was discussed in an earlier article, here).
Carney appeared to back away from one idea he mooted in a speech in December - that the current inflation target could be replaced by a so-called "nominal GDP" target, which could force the Bank to do more to kick-start growth.
All in all, much of the current inflation discussion calls to mind what happened during the early years of the Great Depression when many influential people were warning about inflation even as prices plunged.
Wednesday's consumer price report is especially important, given the fact that it was last month's unexpectedly strong CPI data that set off the current inflation scare in bond and stock markets.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com