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Inflation in sentence

4700 examples of Inflation in a sentence

It is often claimed that monetizing fiscal deficits would commit central banks to keeping interest rates low forever, an approach that is bound to produce excessive inflation.
Very small money-financed deficits would produce only a minimal impact on nominal demand: very large ones would produce harmfully high inflation.
Emerging studies on the risk-taking and asset-price inflation engendered by ultra-low policy rates will eventually convince Fed policymakers to change their stance.
Admittedly, the country’s economic performance after the oil shock of the early 1970s was poor, marked by slow growth, high inflation and unemployment, huge fiscal deficits, increasing debt, a declining currency, and inadequate infrastructure.
Both inflation and the fiscal deficit fell rapidly; businesses and consumers became more confident; investment picked up; and the government put in place an ambitious package of liberalizing reforms.
And historians have come to acknowledge that the Nationalist government’s flaws – corruption, inflation, military weakness – were, in part, a product of its long war against Japan, which it waged essentially alone between 1937 and the Japanese attack on Pearl Harbor in December 1941.
Targeting the TargetersLONDON – Speaking in the happier economic times of 2005, Mervyn King – then, as now, Governor of the Bank of England – stressed the importance of entrenching public expectations of stable, low inflation.
He warned that, “if you let inflation expectations drift too far away from the target, you can end up in quite serious difficulty with a costly process to bring them back again.”
For the last 15 months, the 2% inflation target, which is set by the government and is supposed to be enforced by the Bank of England, has been exceeded by more than a full percentage point.
For most of this period, the British public expected inflation in the coming year to be lower than in the previous year, thanks to the MPC’s strong track record on price stability.
That confidence has now dissipated: inflation expectations have caught up with the actual inflation rate of 4%.
The fear is that tightening monetary policy to bear down on inflation could snuff out the faltering economic recovery.
The US economy is staging a more convincing recovery than the UK, and, in contrast to the Bank of England and the European Central Bank, the Fed is not explicitly mandated by Congress to achieve a specific inflation target.
But, even in the US, policy-setting officials, such as Thomas Hoenig, President of the Federal Reserve Bank of Kansas City, express concern that inflation expectations may become unanchored, owing to the massive expansion of government debt and the Fed’s balance sheet since the financial crash in 2008.
But there is something they can do to ensure the benefits of inflation-targeting rules (credibility and well-anchored inflation expectations) while also supporting recovery: raise the stated target.
The thinking is clear (if rarely spelled out clearly by politicians): whereas a loss of market confidence in the British state’s solvency would most likely trigger a depression, above-target inflation can be rectified at a relatively tolerable cost to living standards (though higher than it should have been).
Granting, for the sake of argument, the force of this logic (and even its critics could hardly deny its coherence), it would be foolish to underestimate the risk of runaway inflation and underplay the economic and social harm it would cause.
To the extent that tolerance of above-target inflation also reflects a desire to erode the real value of public and private debts, market interest rates could soar, leaving indebted governments and households in even greater trouble.
Many commentators believe that governments’ huge budget constraints will force them to rely on inflation.
Simply put, in order to anchor inflation expectations effectively, inflation targets must be realistic.
This would involve raising the target to a level in line with the actual inflation rate observed in the post-crisis period – a level that the public would perceive as realistic, honest, and credible.
Doing so would reduce the debt and tax burdens on future generations, while crucially limiting the risks of much higher inflation in the nearer term.
Moreover, a higher inflation target – and the restoration of credibility that it would imply – would enable central banks to return to a lower inflation target without creating a recession once debt levels had been reduced and aggregate demand had recovered.
Sterling’s substantial depreciation, moreover, augurs a significant rise in inflation, which means that the BoE will have to start raising interest rates sooner rather than later.
Banking has become an instrument of economic policy to ensure GDP growth and employment creation, while keeping inflation at an acceptable level.
Reagan had four key economic goals when he assumed office in 1981: reduce inflation, reduce high personal tax rates, reduce the size of government, and reduce regulation of the private sector.
Inflation came down rapidly, from more than 10% in 1981 to less than 4% in 1983, because Reagan backed the tough monetary policies of US Federal Reserve Chairman Paul Volcker.
Today an inflation rate of close to zero is the accepted goal of US policy.
Faced with high inflation, Thatcher backed a monetarist approach that supported high interest rates and succeeded in sharply reducing inflation.
Today Britain has an independent central bank with an inflation target of 2%.
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