Low Inflation or Deflation Fears Overstated?
Greg Ip of the WSJ notes:
"…But fear of
superlow inflation or even deflation may be getting out of hand. Goldman Sachs calculates
that the fixed-income markets are projecting 32% odds that inflation remains
below 1% for the next five years—which seems far too pessimistic. “We’re not
inflation hawks,” says Charles Himmelberg, chief credit strategist at Goldman.
“Inflation pressures are very well contained. That is distinct from saying
deflation is a big risk now.””
Related:
Persistence of Low Inflation
Rates
Asset Prices and the Fed:
http://www.wsj.com/articles/as-commercial-real-estate-prices-soar-fed-weighs-consequences-1449885225
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MONETARY HISTORY
Neil Irwin takes the long view on interest rates in the
US:
“… But the lessons
of history do offer this guidance: Whether rates will be high or low a few
years from now has very little to do with what the Fed does this week. It has
quite a lot to do with what happens to forces deep inside the economy that are
poorly understood and extremely hard to forecast. And just because many people
are old enough to remember the high inflation and high rates of the 1970s and
1980s doesn’t mean that is the normal to which the economy will inevitably
revert”.
US Inflation Rates Since 1775:
http://blogs.wsj.com/economics/2015/12/14/a-brief-history-of-u-s-inflation-since-1775/