The phrase
"inflation overshoot" means that the rate of inflation exceeds or goes beyond its intended or target level. In other words, when prices of goods and services increase at a faster pace than what is desired, it is referred to as an
inflation overshoot. Full definition
,» he noted, adding that he would «much rather
see inflation overshoot» than policymakers crush the recovery prematurely.
While this move will likely cause some anxiety, we view the chances of a
significant inflation overshoot relative to target as low and think that the Federal Reserve can and will stay on a gradual rate hike path (our base case).
Nomura believes that
inflation overshooting is not enough for the BoE to raise rates.
Global inflation dynamics are picking up, at a time when Central bankers voice more tolerance for «
inflation overshoots.»
Governor Mark Carney has stressed that there are «limits to the extent
an inflation overshoot can be tolerated».
A stable economy and unemployment rate coupled with
an inflation overshoot would more than likely see the markets begin to price back in a May hike that should see the Pound recover to $ 1.40 levels, while weak numbers will be another reason for BoE to stand pat.
Had
inflation overshot its cut - off time, every particle in the universe, including every subatomic particle in your body, would have continued on a hyperbolic orbit.