Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic … growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the … reputation of central banks. Thus, central banks should not try to bring inflation back to the targeted level of 2%. Rather, they …

expansion) by focusing on domestic inflation, the foreign exchange (FX) rate, and the quantity of FX traded in the local market …. The empirical results suggest that the inflation rate is largely driven by foreign price and oil shocks. Nevertheless, the … the exchange rate, and slightly increasing the inflation rate. The latter finding has important implications for the …