The myth of structural disinflation
10 September 2019 | by Peter Warburton
Global fixed income managers, aided and abetted by central bankers, have been seduced by a thesis of structural disinflation. This contends that inexorable forces of demography and technology exert a gravitational pull on the rate of inflation in mature advanced economies which conflicts with the arbitrary objective of a 2 per cent inflation rate. It argues, try as they might, central bankers will ultimately fail in their quest to regenerate inflation, unless they reach for the forbidden tools of monetary debasement. This is a distorted characterisation of the inflationary narrative and the policy context. The path to higher inflation will be straightforward once a political determination is made.