But supply-side conditions that are still restrictive, though an improvement on the exceptional tensions registered in late 2011 and early 2012, also continue to be factor. In the bank lending survey conducted at the start of October for the third quarter of this year, the banks relate the tightening of supply to the poor economic situation and the consequent increase in credit risk.
Taking all these factors into account, where do I come out on the question of how recent trends in globalization have affected inflation in the United States and other industrial countries? On balance, under current circumstances, the entry of China, India, and others into the global trading system is probably having a modest disinflationary effect here. But it is neither large nor inevitable.