Why deflation may be a bigger risk than inflation | Global

Which is the bigger risk in the wake of the coronavirus crisis: inflation or deflation? While some observers have recently argued that high inflation is the bigger danger, at least in the medium term, we believe such concerns are overdone.

In fact, most market-based measures of deflation risk have risen recently – in some cases to historic highs.

In the latest research briefing, we examine:

  • Whether the recent acceleration of monetary growth will lead to rapid inflation;
  • Why deflation is the greater risk;
  • How does deflation affect economies. 

 

Topics: Monetary policy, Inflation, Global economy, Japanification

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