Deflation is unlikely to pose the same risk to Western economies as it did to Japan in the 1990s, according to Schroders' chief economist, Keith Wade.
He sees inflation returning as a major global concern over the medium-term, driven by resurgent emerging market demand and a build up of government debt in the West. Following a recent inflationary peak in the US, UK and Europe, economists have set their sights on preventing deflation, a major factor in Japan's 1990s recession and the Great Depression of the 1930s. However, Wade believes monetary policy makers may overestimate the problems of deflation, stoking the inflationary fires as price growth picks up again. "We do not rule out the possibility of deflation, but would distinguis...
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