ECONOMISTS don’t forecast because they know, said J.K. Galbraith; they forecast because they’re asked. A question that is increasingly put to them is whether inflation, which has been remarkably quiescent for years, will spring a surprise in 2016.

After all, the debt troubles that have weighed down rich economies since 2007 are fading; labour markets in America, Britain and Germany are increasingly tight; housing markets are gathering steam; and the Federal Reserve has just raised interest rates for the first time in almost a decade.  Continue reading