Economics
Weekly
Inflation has started to fall across most developed economies, and this has helped the consensus shift to a soft-landing view for the global economy. But how can we tell if this process will be maintained? In this note, we suggest five milestones that could mark the way to a sustained disinflation.
First, the risk of a renewed spike will decline once core inflation falls below a threshold of about 4-5%. Second, weakness in the money supply should contain inflation risks. Third, stable commodity prices could signal the absence of any build-up of inflation pressure. Fourth, labour markets continuing to ease would help bring wages and services inflation down. And finally, signs that inflationary expectations and behaviours are normalising could contain the risk of a renewed flair up.
