Looks like we will end up in 2015 inflation being around 0.2% or perhaps even lower so the inflation swap traders were closer to the mark the economists. We will be more sure in Dec this year. For 2016 the swap traders say it will be around 0.6% while the economists have it at around 2.0%.
Who are these The Economists? They sound bad at their jobs.
They are economists at various financial institutions (investment banks, economic/financial research firms, various funds etc etc) which happen to be the same institutions where the swap traders usually work too. So often within the same institution the swap traders come up with totally different inflation rates forecasts relative to economists. Since I have some involvement in this sector I am able to speak to some of these economists and swap traders from time to time. Both insist they are right of course. Swap traders say that economists tend to have a herd mentality and are too conservative to shift their forecasts to fit ground realities until it is far too late. Economists claim that swap traders are often trying to hedge their positions so the inflation swap market is more dominated by that factor than what the real inflation rates is going to be. Of course so far the swap traders ended up being right. Let be clear the economist tend to be good at forecasting the monthly CPI YOY number coming out days afterwards. In 2015 they mostly failed to predict the yearly CPI a year in advance.
The Sept CPI YOY number will come out in a couple of days. Economist consensus which I said is mostly accurate seems to be -0.1%. If so then we are even more likely to have the entire 2015 CPI being around 0.2%