Fears of inflationary bubbles are overblown (Q4 2009)

Worries about asset price bubbles, and the inflationary threat they might pose, are at best premature and at worst plain wrong. When thinking about the outlook for inflation we would continue to give far more weight to real world factors, notably the still high levels of unemployment and ample spare capacity. For what they are worth, the trends in the broad money and credit aggregates also suggest that deflation remains the greater risk.