Cazenove's Jeffrey: Deflation puts governments on the naughty step

Deflation puts governments on the naughty step

clock • 3 min read

Richard Jeffrey, CIO of Cazenove Capital, looks at the impact of falling inflation in the UK.

It is the new bogeyman; what governments are threatened with if they are naughty: be good, or deflation will get you. And, it seems, some governments are not heeding the warning, because we are constantly being told that industrial economies are drifting into deflation. But the truth is more complex. In some economies, there are deflationary tendencies, but in others the low inflation rates that are being published are more a reflection of disinflation. So, what is the difference? Whereas I would regard deflation as a syndrome, disinflation is a characteristic. The US and UK, among...

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