Against this background, reflecting a substantial fall in crude oil prices since summer 2014 and a slowdown in emerging economies from 2015 through 2016 accompanied by turbulence in the global financial markets, the observed inflation rate declined, dragging down inflation expectations as well.
A combination of monetary and regulatory tools is needed, such as increases in regulatory capital ratios when leverage is deemed too high, or changes in margin requirements to reign in excessive asset price moves.