Headline inflation looks certain to rebound sharply in most advanced economies during the coming months as the impact of last year’s oil price slump unwinds. Looking further ahead, faster wage growth should push core inflation in the US above the Fed’s 2% target during 2016, but we expect underlying inflation to stay well below central bank targets in Japan and the euro-zone. Some euro-zone countries are likely to experience deflation for several years as they still have high levels of spare capacity and will achieve weak GDP growth, at best. Meanwhile, inflation should pick up in emerging economies, but more gradually than in the developed world. This should bring an end to monetary policy easing cycles in many countries as well as easing fears of deflation in China.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services