Is Low Inflation Desirable and Sustainable

Level: Undergraduate | Grade: 2:1 | Approx. Word Count: 2,088

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Commencing with a brief overview of the causal factors related to inflation, this research seeks to resolve these questions by providing an understanding of the mechanisms that can be used to control and sustain desired inflation levels in the UK economy.

Inflation is one of the most highly debated and topical subject raised in economic discussions. The central theme of these debates have been generally focused on determining whether there is an optimum level of inflation that governments monetary policy should use as an objective for its monetary policy (Sloman et al 2012). Currently, the general consensus of academic and financial expert view is that low levels of inflation provide the ideal environment for economic growth (Griffiths and Wall 2011). However, as national and global economies are subject to volatility, two questions need to be considered, which are: What mechanisms can governments use to achieve optimum inflation levels, and How can low inflation levels be sustained in the longer term