Disinflation


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Disinflation

A decrease in the rate of inflation.

Disinflation

A situation in which the inflation rate decreases, but does not reverse. For example, disinflation occurs when the inflation rate goes from 5% to 2%. Importantly, it is not deflation when the inflation rate becomes negative. Disinflation is considered a normal and healthy part of a business cycle.

disinflation

A slowdown in the rate of inflation. A drop in the inflation rate from 3% in one year to 2% in the next year is an example of disinflation. On an overall basis, disinflation is good for security prices, but it can be painful for individual companies that have made investment and borrowing decisions based upon a belief that a high rate of inflation would continue. See also inflation.

Disinflation.

Disinflation is a slowdown in the rate of price increases that historically occurs during a recession, when the supply of goods is greater than the demand for them.

Unlike deflation, however, when prices for goods actually drop, disinflation prices do not usually fall, but the rate of inflation becomes negligible.

disinflation

a fall in the general price level, frequently accompanied by a reduction in the level of national income (DEFLATION). A disinflation is often deliberately brought about by the authorities in order to combat INFLATION and to eliminate a BALANCE OF PAYMENTS deficit. Instruments of disinflationary policy include fiscal measures (e.g. tax increases), monetary measures (e.g. higher interest rates), and prices and income controls. See FISCAL POLICY, MONETARY POLICY, PRICES AND INCOME POLICY, INFLATIONARY GAP, INTERNAL-EXTERNAL BALANCE MODEL.
References in periodicals archive ?
As economists came to accept the idea of a short-run but not a long-run trade-off between inflation and unemployment, the stage was set to ask about how much output is lost as a result of a disinflation.
contribute to making gains from a disinflation sustainable?
Recall the episode that I mentioned earlier in my remarks, about our concern over unwelcome disinflation in 2003 and early 2004.
Chapter 9 by Wojciech Maliszewski studies the impact of central-bank independence on the disinflation process.
The sacrifice ratio typically refers to the output cost for a permanent decline in inflation during a disinflation episode, whereas the benefice ratio typically refers to the output gain for a permanent rise in inflation during an episode of accelerating inflation.
The third great confiscation came during disinflation.
An outcome of the Federal Reserve's tightening (most visible in the form of higher short-term interest rates) is that some industries tend to be impacted more than others by the disinflation process.
Consistent with the Schwartz Hypothesis, these episodes of increased banking losses and failure occurred in periods of disinflation.
These implications suggest that a central bank faced with the task of disinflating from a high rate of inflation would want to provide substantial information about the new disinflation policy at its inception and then gradually withdraw from public discussion as inflation declines.
Clearly with disinflation being the theme, and most countries enjoying remarkable current account surpluses, and those being sustained, there is still marginal pressure for rates to come further down," Mr Eschweiler said.
As a consequence, we must be vigilant to the re-emergence of destabilizing influences--both higher inflation, and shortfalls in demand and decreases in some prices that would press the disinflation process too far, too fast.
In New Zealand, the disinflation during the four years prior to target adoption was accompanied by a period of sluggish GDP growth and, since 1988, rising unemployment.