Asia’s Inflation Trap
“The lessons of earlier battles against inflation are clear on one fundamental point: inflationary pressures cannot be contained by negative, or slightly positive, real short-term interest rates. The only effective anti-inflation strategy entails aggressive monetary tightening that takes policy rates into the restrictive zone. The longer this is deferred, the more wrenching the ultimate policy adjustment – and its consequences for growth and employment – will be. With inflation – both headline and core – now on an accelerating path, Asian central banks can’t afford to slip further behind the curve.” Read more.
Project Syndicate 01/26/2011
