Sometimes the central bankers are almost funny, except when...they seem a bit scary

catch22

Japan does the big QE several months ago; but also installs a new consumer tax; as was discussed here prior. This kept killing the Yen, which also would be a problem with $US priced oil imports. Abe was and I suppose still is shooting for the 2% inflation rate that would indicate some form of economic healing.

Some in the EuroZone have the same goal for inflation.

"Now, it seems as if Draghi is using oil as an argument to convince the last QE-opponents. However, it is remarkable that Draghi was relatively muted on the positive impact from lower energy prices on oil."

Article, some of Draghi's remarks today

So, lower energy related products places more money in the spending hands of the consumer and likely reduces costs into other sectors of an economy. Maybe not inflation per a central bank; but what the heck. Mr. Draghi is disappointed because it will disrupt a magically inflation number; which takes money out of the consumer's wallet.

I must be totally out of touch with "this" form of economic theory.

I really don't know where their heads are at with these policies and spoken words.

Can anyone here direct me to a study link that explains these "games" and............

The one summary our house will remain with, is that there remains much fear (some central banks) of deflation, period.

Meanwhile, we'll continue to attempt to invest properly for total returns; in spite of the madness surrounding us.

Take care,
Catch

Ted

@catch22: That a boy, keep investing for TR in spite of the madding crowd
Regards,
Ted

scott

Basically, inflation or bust. If what they do proves unsustainable, it was because it "wasn't enough". Invest accordingly.

Old_Joe

While I express no opinion as to the theories the central bankers are trying to follow (prove? disprove?), I really don't have a problem with their perspective re inflation. Inflation is when prices go up and a given amount of currency purchases less. Deflation is the opposite.

If consumer fuel costs and costs of other products go down because of the (temporarily, you'd better bet) cheap oil, as well as other less expensive commodities such as steel, aluminum and copper, that sure as hell isn't my definition of inflation. Just the opposite. So I see no inconsistency there.

"However, it is remarkable that Draghi was relatively muted on the positive impact from lower energy prices on oil"

Maintaining a high level of consumer spending is desirable, from almost any general theory of economics. If consumers decide to wait to make purchases because they anticipate lower future prices, that's exactly the problem that the central bankers see with respect to a deflationary environment. Direct consumer energy costs, however, would not seem to lend themselves to a particularly deflationary effect: when you're cold, you turn up the thermostat. If you have to get from A to B, you fill up the car. Can't see that anyone is going to postpone those purchases because the cost might go down sometime.