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Knuthsen: Why central banks have got it wrong

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They look confused, are too concerned about the risk of deflation and are increasing financial instability in the markets. So says Saxo Private Bank's Teis Knuthsen on central banks.

He believes that they don't appear to understand where inflation comes from and why it's falling. He says reduced energy prices and a move towards a more digital economy are partly responsible. 

Knuthsen says he would like to see central banks recognise that this type of deflation is not necessarily a bad thing while also acknowledging that domestic demand is growing in both the United States and Europe.

Teis calls for a paradigm shift in monetary policy and asks central banks to admit that they can play only a limited role in dealing with inflation.