How low interest rates have reinforced disinflation

The decline in inflation in OECD countries since the 1980s is the primary cause of the expansionary monetary policies and the decline in interest rates. But low interest rates have reinforced the decline in inflation, whereas they are usually expected to be inflationary. They have done so by encouraging investment, thereby increasing the supply of goods and services. In particular, the high level of investment in commodity production has helped keep commodity prices low. Without the highly expansionary monetary policies, there would not have been any shale gas or oil in the United States. So one can see what may account for n eo-Fisherism’s positive correlation between nominal interest rates and inflation: the reaction of the supply of goods and commodities.