We accept that there will be some movement of
inflation over the course of the cycle, but we want to make sure that inflation does not rise over time (now that price stability has been achieved).
By looking at atmospheric profiles above Gan Island, they could see how clouds and moisture changed which altitudes were heated
over the course of each cycle of the MJO.
Partly because most inflation problems were demand
driven over the course of the cycle, there was a continuing belief that if the cycle could be smoothed, inflation would be contained, and both fiscal or monetary policy were available instruments in addressing the cycle.
The critical issue here is that even though inflation rose and
fell over the course of the cycle, price expectations did not move — even when inflation was running at 5 per cent, the community at large expected it would soon be back to its normal lower pace.
«Whereas capital spending has usually contributed an annualized 2.6 % to real GDP
growth over the course of a cycle, this cycle it has only contributed an annualized 0.7 % — the worst recovery in capital spending in more than 50 years,» says Lisa Shalett, head of Investment & Portfolio Strategies for Morgan Stanley Wealth Management and the lead author of a new report, «The Capex Conundrum and Productivity Paradox.»
As credibility builds over time, monetary policy does not have to respond to every hint of inflation, knowing that the small fluctuations in
inflation over the course of the cycle will not have any permanent effects.
Stabilising and maintaining price expectations is the key issue in thinking about the question of «
over the course of the cycle».
You can see this sense of priorities — with medium - term price stability being the sine qua non, and our acceptance that inflation may vary a little
over the course of the cycle — in the specification of the inflation target as being an average «over the course of the cycle».
In talking to an audience such as this, I can take the time to set out quite specifically what we have in mind by «
over the course of the cycle».
The RBA's inflation target is defined «
over the course of the cycle», «allowing for the natural short - run variation in inflation».