Central Bankers Firm On Checking Inflation

With memories of the turbulence brought on by double-digit inflation in the late 1970s and early 1980s, central bankers are determined to keep inflation in check. Is more progress possible? Can it be achieved without sacrificing economic growth? Or are major nations already giving up too much in the effort to stamp out inflation, which occurs when prices rise too quickly, eroding the value of money and other assets.

A symposium at the scenic mountain resort of Jackson Hole, Wyoming, late next week will provide an opportunity for central bank officials and prominent economists from around the world to examine those questions. The August 29-31 forum on "Achieving Price Stability" is being sponsored by the Federal Reserve Bank of Kansas City and has generated keen interest in financial markets.

Participants say the discussion comes at an ideal time. "What is so startling and impressive is that in most of the major industrial nations inflation is hovering near 2 or 3 per cent and is even lower in Japan," said Princeton University professor Peter Kenen.

"Five years ago, if you had said to central banks that they would be at those levels and that they would be there for a considerable amount of time, everyone would have said you were out of your mind," he said.

Economists pointed to a number of forces that helped to set the stage for declining inflation.

Among those were changes in the labour market that have made workers less aggressive. about demanding higher wages, which in turn has eased any inflationary wage pressures.