What do we really know about inflation? The state of the art was recently laid out by top academics and central bank economists at the "Inflation: Drivers & Dynamics" conference, held at the Federal Reserve Bank of Cleveland. In this comment we give a first-hand account of what was discussed in "The Land". The conference gave greater insight into the anchoring of inflation expectations at central banks' targets, mixed with a new understanding of inflation fundamentals. Change is often hard work, but policymakers would be smart to embrace these latest insights.
- Inflation in line with expectations, and will rise further in June
- The energy price rise is no longer a temporary nuisance for the Riksbank
- Another sign that the Riksbank will indeed hike its policy rate in December
- Consumer prices rose 0.2 percent m-o-m in May - weaker than expected
- Annual inflation ticked up from 0.8 to 1.1 percent
- Inflation is still relatively low but should move up further
- Forbrugerpriserne steg med 0,2% m/m i maj, hvilket var mindre end vi havde ventet
- Årsstigningstakten i forbrugerpriserne steg dog fra 0,8% til 1,1%
- Der er stadig tale om lav inflation i et historisk perspektiv
- CPI-ATE at 1.2 percent, vs. Norges Bank 1.6 percent
- We still believe Norges Bank will hike its policy rate in September...
- ...but the isolated effect of softer inflation is for a lowering of the rate path
- Core inflation closer to Norges Bank's estimate
- Regional Network pointing to still-solid GDP growth, in our view...
- ...but the key question is: have we been too optimistic about growth in 2018?