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Rapid drop in inflation to allow more monetary stimulus

Inflation is now on a downward trajectory almost everywhere as global commodity prices drop back and demand conditions weaken. Disinflation will gather pace in the first half of 2012 and inflation in G7 economies is likely to average 1% or less in both 2012 and 2013. This will allow central banks to loosen monetary policy more than markets currently anticipate, particularly in emerging economies.

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