Headline inflation continued to hover around zero
in the second half of 2015, with the renewed fall
in oil prices during the summer of 2015 and the
strengthening dollar exerting downward pressures.
Excluding food and energy, inflation stayed below
2 percent and is projected to rise only gradually in2016. Market-based inflation expectations
remained somewhat below the Federal Reserve’s 2
percent inflation target in the second half of 2015,
pointing towards a gradual normalization of policy
rates. The fiscal deficit is estimated to have fallenfurther to 2.8 percent of GDP in 2015, the result
of stronger growth and consolidation efforts.
Fiscal policy has eased to a broadly growth-neutral
stance in 2014-15, having weighed on activity in
previous years.