Inflation is a global problem

The inflation talk has been very euro-centric but inflation is a global problem. This has been noticed by many  economists; however, it has not been the core focus of  policy-makers who seem to have more parochial interests. Solving the inflation for one country may not solve the global inflation problem.

Close to 30 high-income countries now have inflation below 1% and one third of those have negative inflation. The numbers are also high in developing countries which usually always have base inflation that is higher than the developed world. The range may be higher, but the trend is the same. The chart is from the World Bank Global Economic Prospects, January 2015.

So far, the solution is to flood economies with money and drive rates to zero. This has been good for asset markets, yet it has not been able to raise inflation rates. Unconventional policies should now not about buying more bonds. Asset inflation will still be the policy result of the day.