How the next global crisis will be different for investors

Article Abstract:

The possibility of inflation dropping to extremely low levels, and perhaps even sinking into deflation, is causing considerable concern among economists. Even modest deflation can have a negative impact on economic performance, distorting resource allocation and preventing economies reaching their full potential. If deflation does emerge, then bonds and equities will tend to move in opposite directions. Falling inflation has so far been beneficial for share prices, but it is possible that shares are over-valued and that equities will perform badly in 1998.

Deflation (Finance), Deflation (Economics)

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The European countries living with the wrong rates

Article Abstract:

There are considerable differences in inflation rates between countries belonging to European monetary union. France and Germany effectively have no inflation, while Italy clearly still has some inflation. This imbalance within the core of European monetary union means that it is very difficult to find an interest rate that is appropriate for the whole euro region. European countries are being forced to operate with the wrong interest rates, as adjusting structural policies to attempt to boost or limit demand would take a long time.

European Union, International economic relations, Interest Rates, Europe, Economic aspects

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Euro will help slay our inflation dragon

Article Abstract:

The UK will eventually adopt the European measure of inflation as it prepares to join the single European currency. This will lead to a halving of the inflation rate. The government will have to reduce the target for inflation, and the Bank of England monetary committee will have to shadow the inflation aims of the European Central Bank. Long-term UK inflation rates will become broadly identical to those of the euro-zone, and it is quite possible that long rates will level out to below French and German ones.

Comment:

Has reported it will use European measure of inflation

United Kingdom, Financial management, Bank of England, Prices and rates, Economic policy

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