Here’s a new word to describe the price environment in Europe

Welcome to a new word in the world of central banking/monetary policy.

It’s “lowflation” — to indicate a period of prolonged low inflation.

It’s that in-between state when an economy is experiencing declining rates in the rate of increase in prices, but prices aren’t falling outright as yet.

As far as I can tell, the International Monetary Fund was the first institution to use that word back in March. But everybody really started talking — and using — that word after IMF chief Christine Lagarde, warned Europe of the dangers of lowflation  just before the European Central Bank, which is grappling with that exact situation, had its policy meeting last week.

Inflation is hovering at 0.5% in the eurozone, dangerously close to tipping into deflation.

Yet nothing concrete came out of that meeting  — barring the extremely interesting fact that quantitative easing was at least discussed by bank officials. That’s possibly an indication that the European Bank might finally be gearing up unleash QE on the world.

Until we get some firm new action from the ECB, we”ll just have to be content with a new word.

[Image Credit]


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