Although headline CPI inflation has declined to –0,1 percentage points and Personal Consumption Expenditure inflation stands at 0,2 percentage points (year-on-year), it is likely that monetary policymakers will look through the oil price shock. Core Personal Consumption Expenditure inflation is at 1,3 per cent and services inflation is at 2,1 per cent, very close to the US Fed’s 2 per cent goal.
This process will also fetter the pension funds themselves, since they are required to invest 30 percent of their portfolio in the market, and part of this is naturally directed to government bonds.