However, employment and wage data seem to indicate that
economic slack still exists, particularly in labour markets.
We compared this cycle with previous ones, based on estimates
of economic slack, and found it has room to run.
While there have been recent gains in employment, subdued growth in wages and hours worked continue to reflect
persistent economic slack in Canada, in contrast to the United States.»
Slower growth — a function of structural changes such as an aging society — means
economic slack created in the last recession is being eroded at a sluggish pace.
Core inflation is close to 2 per cent as the transitory effects of the past depreciation of the Canadian dollar are roughly offsetting disinflationary pressures
from economic slack, which has increased this year.
The Bank expects total CPI inflation to be close to 2 per cent from early 2017 onwards, when these temporary factors will have dissipated, but downward pressure on inflation will continue
while economic slack persists.
As expected, the bank held its overnight rate at 0.5 percent, where it has been since July 2015, even as it trimmed GDP forecasts, saying downward pressure on inflation will continue while
economic slack persists.
There have been ongoing gains in employment, but a significant amount of
economic slack remains in Canada, in contrast to the United States.
Significant economic slack emerged in major developed markets (DM) since the global financial crisis and in emerging markets (EM) following the macroeconomic adjustment in 2014 - 16.
A higher top speed for growth means there's
more economic slack than previously envisaged, informing the central bank's decision to keep rates unchanged at this juncture.
Low inflation, together with low inflation expectations and a still - large degree of
economic slack explain why the ECB is still widely believed to be preparing another monetary stimulus package.
The key priority in Hangzhou — as it was in London back in 2009 — should be increasing global demand and making sure that it picks up particularly in those countries where there is the
most economic slack.
It is possible that policy - makers might have over-estimated potential output, and
hence economic slack.
The bank also said Canada saw gains in employment, but that
considerable economic slack remained present when compared to the United States.
And despite recent gains in employment, subdued growth in wages and hours worked continues to reflect
persistent economic slack in Canada, in contrast to the United States.
Core inflation has been close to 2 per cent, with disinflationary pressures
from economic slack being offset by transitory effects of the past depreciation of the Canadian dollar and some sector - specific factors.
«Given the uncertainty surrounding the measurement
of economic slack, the true amount may be larger than estimated, which could slow down the emergence of price pressures,» Draghi said Monday.
«Given the uncertainty surrounding the measurement of
economic slack, the true amount may be larger than estimated, which could slow down the emergence of price pressures,» Draghi told a regular committee hearing.
Total CPI inflation remains near the bottom of the Bank's target range as the disinflationary effects of
economic slack and low consumer energy prices are only partially offset by the inflationary impact of the lower Canadian dollar on the prices of imported goods.
Core inflation is close to 2 per cent because the effect of persistent
economic slack is still being offset by that of past exchange rate depreciation, although the latter effect is dissipating.
For years I have made the point that progress in winding back
economic slack is made not by high growth in any individual year, but by maintaining an expansion over a sustained period.
Third, B&R point out that some outsiders are pushing the Fed to rely on some version of the «Taylor rule,» an equation derived by economist John Taylor that describes the Fed's historical rate - setting behavior as a function of inflation and
economic slack.
A consequence of the sustained expansion is that
the economic slack generated in the last recession has been gradually used up.
* Information efficiency *
Economic slack * Contained inflation * Coordinated Central Banks * The growth of China and India and their continued purchasing of US debt * The growing perception that US dollar denominated assets are the safest assets in the world * A 30 + year trend of declining rates that is telling us we're more adept at managing inflation with each new cycle that passes
This will happen if economic actors conclude as they reasonably can from what they are hearing that the Fed will cap inflation at 2 percent but allow it to fall below 2 percent in periods of
economic slack.
Some reasons for the fall include: the Federal Reserve lowering the Fed Funds rate, declining inflation, improved monetary efficiency,
economic slack, the continued global demand for US assets, and relative stability in the US vs. other markets.
After incorporating our new thinking around exports, and taking into account the possible near - term effects on house resales of the new mortgage rules, our projections show a lower profile for economic growth, an extended period of
economic slack, and a later return of inflation to the 2 per cent target.
* Information efficiency *
Economic slack * Coordinated central banks * The dominance of China and India and their increased purchase of US debt * USD and US assets as a continued safe haven * Rates have been going down for 30 + years in a row, the trend is telling us we're more adept at managing inflation with each new cycle
Inflation is projected to be near 2 per cent through 2017 and 2018 as the temporary effects of higher consumer energy prices and lower food prices dissipate and
economic slack is absorbed.
The slower the pace of a recovery, the longer it takes to absorb
the economic slack created in the last recession — and the longer it takes to reach full capacity and ultimately the peak that signals the cycle's end, our analysis shows.
Measures of core inflation have edged up in recent months, reflecting the continued absorption of
economic slack.
Also, the output gap has recently closed for the first time in 10 years and with
no economic slack to spare, the economy is bracing for tax reform that will catalyze enhanced corporate investment.
«Given the uncertainty surrounding the amount of
economic slack, the Bank of Canada should maintain its current policy stance for the time being.
Core inflation has been close to 2 per cent, with disinflationary pressures from
economic slack being offset by transitory effects of the past depreciation of the Canadian dollar and some sector - specific factors.