Inflation to fall further as euro-zone crisis deepens

Headline inflation has dropped this year in most major economies and is likely to come down further as global growth falters, the euro-zone crisis deepens and commodity prices continue to fall. We expect inflation to average just 1% in the G7 next year. As a result, central banks in the major advanced economies will keep interest rates near zero for the foreseeable future, though most will be reluctant to announce further policy stimulus.