As the benefits of stable prices accrue and as financial markets deepen and become more sophisticated, the benefits of sound economic policies will help create support for institutional reforms that make returning to inflation harder – albeit not impossible – for future governments.
Implications of low inflation for bond markets What are the implications of low inflation and low inflation volatility for interest rates and yield curves? I believe that market confidence in continued low inflation has helped drive down the slope of the yield curve around the world by reducing the premium demanded for holding long-term nominal assets.