The elusive case for low inflation

Article Abstract:

The Bank of England has to ensure price stability in the United Kingdom, and its task does not include seeking to prevent a recession. The government has set an inflation target of 2.5% for inflation, and there are a number of reasons for seeking to control inflation. Inflation can erode savings and lead to uncertainty. Savings and borrowing decisions are distorted. Taxation on savings increases when interest rates are high. Some of the problems of high inflation are related to the tax system, which could be changed, and high interest rates, used to keep inflation low, also have economic costs.

United Kingdom, Economic policy

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Don't let deflation puncture your spirits

Article Abstract:

There is a debate as to whether deflation could occur, and over its possible effects. Deflation may be unexpected, due to an increase in productivity, or to a drop in demand. Unexpected deflation can leave companies with obligations they cannot meet. Economic activity could be hit since borrowers spend more than creditors. There could also be large-scale defaults which could hit banks. High real interest rates would exacerbate these problems. Deflation does not cause these problems if it is due to productivity increases.

Deflation (Finance), Deflation (Economics)

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US inflation's mixed signals

Article Abstract:

Problems in analysing US inflation data and its components are examined in detail.

Measurement, Statistics, United States economic conditions

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