Banking Term: Biflation
The
simultaneous existence of inflation and deflation in an economy.
Biflation, while seemingly a paradox, results when inflation in
commodity assets coexists with deflation in debt-based assets. Biflation
typically occurs when a fragile
economic recovery causes the central bank to open up the monetary
spigots in a bid to stimulate the economy. This may result in higher
prices for certain assets such as energy and precious metals, and
declining prices for leveraged assets such as real estate and
automobiles.
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