A look at survey measures of inflation expectations from three and six months after the announcement of QE2 show that disinflationary
pressures abated after the program's introduction.
In the near term, real wages and consumer spending will be boosted by the disinflationary
effect of the oil price shock.
Bundesbank stalling on quantitative easing allowed the disinflationary
process to proceed unabated when it should have been cut short.
Governor Raghuram Rajan said in his policy statement that RBI will continue to closely monitor inflation developments, and remains committed to the disinflationary
path of taking Consumer Price Index (CPI) inflation to 8 per cent by January 2015 and 6 per cent by January 2016.
The move was intended to set the economy securely on the disinflationary
At the same time, we reiterate our view that both demand-side and supply side disinflationary
pressures have run their course in Q413.
trend is even more pronounced in Europe, where the inflation rate was 3% at the end of 2011; 2% at the end of 2012; and has dropped to 0.
Consumer prices are rising slowly according to the latest data, although the disinflationary
pressure seen in the spring has abated.
The key disinflationary
factor driving inflation towards the target tolerance band will be the lower cost-push pressure in food production.
The second round of purchases, which began in late 2010, also appears to have helped in countering disinflationary
pressures, he added.
The unemployment rate suggests there is substantial slack in the labour market, yet some other indicators suggest the market is tighter and less disinflationary
In a disinflationary
/deflationary environment investing in high quality corporates debt and equity, possibly with strong balance sheets, and hard assets is the answer in this disinflationary