Inflation and interest rates: Up, up and away

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standard article

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Rise of the robots

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Inflation and interest rates

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Higher inflation may be needed to leave extra-low interest rates behind

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AT FIRST glance, rich-world central banks are going their separate ways. Cheered by sturdy growth figures, the Bank of England and the Federal Reserve are shuffling toward an exit from easy monetary policy; markets found Janet Yellen’s first Fed statement unexpectedly hawkish. The European Central Bank, in contrast, is tacking looser. On March 25th Jens Weidmann, president of the Bundesbank, suggested that the ECB might need to be more forceful in order to keep the euro-area economy out of the grips of deflation.

Look again, however, and the path forward appears similar across the rich world: low interest rates stretch off into the visible distance. The outlook is clearest in Europe, where the ECB may toy with negative rates as a means to fend off deflation. But even in America …

Link to article: www.economist.com/news/finance-and-economics/21599774-higher-inflation-may-be-needed-leave-extra-low-interest-rates-behind-up-up-and?fsrc=rss

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