Indeed, the influential observers who have connected the current period of lower and more stable inflation across the world with the workings of globalisation have done so by carefully linking it to either its influence on the incentives to engineer an inflationary bias; 9 or the emergence of an international consensus on putting price stability centrepiece as the overriding goal of independent central banks.
10 Nevertheless, the forces of globalisation may have indeed affected cyclical inflation developments through the following two channels. First, the influence of foreign conditions in the price and wage formation process may have increased because of heightened international competitive pressures, possibly decoupling inflation and standard domestic measures of macroeconomic slack.