Average inflation in advanced economies was below 2% y/y in January and we expect it to decline further over the course of the year. Global demand should be fairly weak, not least due to the recession in the euro-zone. Falling oil prices and an improvement in the supply of agricultural crops should push commodity prices lower in the second half of the year. With inflation at or below target in most countries, central banks will have a free hand to maintain ultra-loose monetary policy.
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