After eight years of unconventional monetary policy initiatives of immense scale from the world's global central banks, we appear to be grappling with the limitations of monetary policy. Despite herculean efforts over the better part of a decade by global central bank policy makers to boost inflation, inflation around the world has remained stubbornly low. What Slowflation means to investors is that we are likely to remain in a muted global growth environment. Monetary policy will likely remain very accommodative globally, keeping nominal government bond rates low to negative. Inflation measures may creep slowly higher, but any sharp acceleration is likely to be transitory. Meanwhile, economic growth in the U.S. seems likely to continue to inch forward and remain weak but not vulnerable.
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