Blog: September 2020
This blog is written by NIESR Fellow Huw Dixon. Any opinions expressed in the paper are those of the author, and do not necessarily reflect the views of the Institute
The CPIH measure of inflation has decreased to 0.5% in August 2020, from its July level of 1.1%. The CPILW fell by less, with an August value of 1.0% down from the previous month 1.2%.
The COVID-19 pandemic has the potential to have a significant impact on medium-run inflation expectations particularly if considered in conjunction with large fiscal stimuli, ultra-loose monetary policies and the risk of de-globalization. The recent review of monetary policy framework by the Federal Reserve, focusing on an average inflation target strategy, highlights how difficult it can be to keep inflation expectations well-anchored when secular factors are at play (i.e.