How much do we really know about inflation?

Presentation on the BIS Annual Report by Mr Claudio Borio, Head of the Monetary and Economic Department of the BIS, on the occasion of the Bank's Annual General Meeting, Basel, 25 June 2017.

BIS speech  | 
25 June 2017
by Claudio Borio

An obvious policy question at the current juncture is whether an inflation flare-up could bring to an end the expansion under way. This question, in turn, begs an even more fundamental one: how much do we really know about the inflation process? Based on analysis presented in BIS Annual Reports, this presentation reaches three conclusions: we may be underestimating the influence that globalisation has had on inflation; if so, a flare-up may not be that likely; and if the hypothesis is correct, it would also point to refinements to current monetary policy strategies.