Deflation
in sentence
696 examples of Deflation in a sentence
Japan’s
deflation
and economic stagnation over the last two decades stemmed largely from a dysfunctional financial system and a lack of private demand.
In the short term, it is important that monetary policy in the US and Europe vigilantly fight Japanese-style deflation, which would only exacerbate debt problems by lowering incomes relative to debts.
Outright
deflation
would be an even more dangerous threat.
Though Weidmann does not deny the risk of deflation, he argues that the consequences of recent price data may be less serious than believed, while those of full-fledged QE could be more serious than assumed.
The BOJ’s action is predicated on Abe’s commitment to restoring the sustainability of public finances once
deflation
has been defeated and the economy has returned to growth.
But it does not diminish the need for bold unconventional action against deflation, and it should not prevent the ECB from launching QE.
Ongoing uncertainty about renminbi devaluation is fueling fears that deflationary forces will sweep through emerging markets and deliver a body blow to developed economies, where interest rates are at or near zero (and thus cannot be lowered to defend against imported deflation).
Now that Germany’s annual surplus – which has grown to €233 billion ($255 billion), approaching 8% of GDP – is no longer being recycled in southern Europe, the country’s depressed domestic demand is exporting deflation, deepening the eurozone’s debt woes.
Moreover, during the upcoming G-8 summit, Hollande will enjoy the support of the United States, which worries that
deflation
in Europe would slow its own economic recovery.
The continuing focus is the lack of growth in China -- it has fallen to "only" 7.1% -- along with deflation, the lack of confidence on the part of households who will feel the impact of the formidable restructuring problems in state enterprises, and the loss of international competitiveness.
After expanding its balance sheet to nearly 60% of GDP – double the size of the Fed’s – the BOJ is finding that its campaign to end
deflation
is increasingly ineffective.
But it would be strange to conclude from Greece’s experience that wage
deflation
is a useless tool for improving competitiveness, given the widespread assumption that Germany benefited massively from it.
The bitter medicine that Germany and the ECB want to impose on the periphery – the second option – is recessionary deflation: fiscal austerity, structural reforms to boost productivity growth and reduce unit labor costs, and real depreciation via price adjustment, as opposed to nominal exchange-rate adjustment.
Unless they abandon asymmetric adjustment (recessionary deflation), which concentrates all of the pain in the periphery, in favor of a more symmetrical approach (austerity and structural reforms on the periphery, combined with eurozone-wide reflation), the monetary union's slow-developing train wreck will accelerate as peripheral countries default and exit.
Unless the eurozone moves toward greater economic, fiscal, and political integration (on a path consistent with short-term restoration of growth, competitiveness, and debt sustainability, which are needed to resolve unsustainable debt and reduce chronic fiscal and external deficits), recessionary
deflation
will certainly lead to a disorderly break-up.
But the truth is that America in the Greenspan years benefited from a period of declining commodity prices, and from
deflation
in China, which helped keep prices of manufactured goods in check.
In his election campaign, and since coming to power, Abe has advocated a radical revitalization of the Japanese economy that would end two decades of
deflation
and growing political and strategic uncertainty.
Only in January of this year, following the LDP’s landslide election victory, did the BOJ set a target of 2% price growth and issue a joint announcement with the government taking aim at
deflation.
Abenomics’ goal is to escape two decades of
deflation.
Japan, at long last, will not have to fight
deflation
with one hand tied behind its back.
The only difference is that, if exchange rates remain fixed, advanced countries will have to go through a protracted period of low inflation (or even deflation), which will make their debt burden even harder to bear, and emerging countries will have to enter an inflationary period as capital flows in, driving up reserves, increasing the money supply, and ultimately boosting the price level.
For both sides, it is more desirable to let the adjustment take place through changes in nominal exchange rates, which would help contain
deflation
in the north and inflation in the south.
Yet Japan, like the US and Europe, continues to display a quixotic tendency to tilt at
deflation
windmills, with rock-bottom interest rates and purchases of massive amounts of government debt.
Here, the wage surprise stands out, because only when the long-missing link between corporate profitability and wages is restored will investment in houses, cars, and other durables, and household consumption in general, finally rid Japan of its
deflation
and put its economy on a sustained growth path.
The US, the United Kingdom, and other economies risk a similar outcome – multi-year recession and price
deflation
– if they fail to act appropriately.
Central banks must be as “activist” when combating
deflation
caused by weak demand as they are when fighting high inflation driven by excessively strong demand.
Czechs fear inflation, even though it hit a 13-year low last year and the Czech National Bank, of which I am Vice-Governor, has been fighting to avert the risk of
deflation
since 2013.
Had they not intervened, their economies would have faced catastrophic deflation, major asset-price slumps, and a complete meltdown of the financial and real sectors.
Although his economic strategy, known as “Abenomics,” appears to have ended deflation, vibrant growth is nowhere in sight.
With higher US market interest rates attracting additional capital inflows and pushing the dollar even higher, the currency’s revaluation would appear to be just what the doctor ordered when it comes to catalyzing a long-awaited global rebalancing – one that promotes stronger growth and mitigates
deflation
risk in Europe and Japan.
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