Jargon-watch: lowflation
Lowflation. All of a sudden this not-so-clever portmanteau is everywhere.
The euro zone slipped into outright deflation in December, with prices falling 0.2% year-on-year. The flurry of economic and market outlooks recently published have been liberally peppered with references to lowflation.
- Goldman Sachs: “A mechanical reduction in core inflation could have an important impact on monetary policy, especially if other indicators such as wages remain consistent with continued lowflation.”
- Nomura: “With a global disinflationary shock, we think market participants will be more confident about the Federal Reserve and the Bank of England’s ability to address the lowflation issue.”
- Morgan Stanley: “In our view, the dominant macro theme in 2015 will be central banks’ battle against lowflation–excessively low inflation that has become pervasive, persistent and pernicious.”
Step aside, Grexit, Lowflation is here.