Why is Inflation Below Target in so many Economies?

Why is Inflation Below Target in so many Economies?



With only a few exceptions, 2017 has seen inflation falling below target in many major economies such as the US, the Eurozone and Japan. This has also percolated to Hong Kong and is starting to impact China. The year 2017 has also been notable for the failure of wages and inflation in these economies to follow the Phillips curve playbook, for the weaker US dollar trend despite US rate hikes, and for stock markets hitting new highs.

  • In the US, how will Fed rate hikes and balance sheet shrinkage, or Mr Trump’s fiscal policies impact the business cycle expansion in 2018?
  • In Europe, will the ECB be able to taper its QE purchases in 2018, or is the economic recovery still too fragile, with inflation too low?
  • In the UK, will inflation rise further, and can the economy regain its pre-Brexit vigour?
  • How is China, and China’s inflation, affected by these global trends?

Speaker/Course Instructor

Dr John Greenwood is the Chief Economist of Invesco Ltd. with responsibility for providing economic analysis and forecasts to Invesco portfolio managers and clients. He started his career in 1970 as a visiting research fellow at the Bank of Japan. In 1974 he joined GT Management as Chief Economist. The firm was acquired by Invesco in 1998. As editor of Asian Monetary Monitor in 1983, he proposed a currency board scheme for stabilising the Hong Kong dollar. He was a director of the Hong Kong Futures Exchange Clearing Corporation for four years until 1991, and in 1992 became a council member of the Stock Exchange of Hong Kong, a position he held for twelve months. In that same year, he was an economic adviser to the Hong Kong Government. He has been a member of the Committee on Currency Board Operations of the Hong Kong Monetary Authority since 1998. He is also a member of the Shadow Monetary Policy Committee in England, and he serves on the board of the Hong Kong Association in London.