INTHEBLACK October/November 2024 - Magazine - Page 19
Sticky high inflation is
continuing to challenge many
governments and central
banks around the world.
Interest rates remain the
weapon of choice, but some
are using other tools to
suppress prices.
Asian economies have
achieved mixed results based
on the different inflation
approaches being used.
Putting a lid
on inflation
The inflation genie escaped from its bottle during the COVID
outbreak. Now the race is on to get it back in and close the lid.
Words Gary Anders
When COVID-19 started sweeping
across the globe in 2020, few would have
predicted the deadly virus would soon
unleash an international inflation pandemic.
In many respects, an inflation outbreak was
inevitable. After staying mostly dormant for
many years, global inflation was destined to
spike higher.
Supply chain disruptions, higher oil
prices and unsettling geopolitical events
have created a perfect inflation storm.
Other contributors include the wideranging economic stimulus programs
instigated by governments and central
banks, such as cutting official interest rates
to record lows.
While the global spread of COVID has
largely been curtailed thanks to vaccines
and medical advances, in some countries,
inflation is still proving to be more resistant
to economic treatments.
While Australia has largely relied on
monetary policy to rein in inflation by
ratcheting up interest rates, other countries
have used legislated price controls, increased
taxes and reduced government spending.
UNEVEN OUTCOMES
The inflation battle, at least in many regions,
is still raging. Some countries have clearly
had more success than others in quelling
domestic inflation levels to within their
stated target bands.
Despite having declined from peak
levels, inflation remains sticky in the
US, Australia, the UK and Europe.
Hyperinflation – also known as ultrahigh
and accelerating inflation – remains an issue
in many African and Central and South
American countries.
In Asia, the inflation picture is varied
and many countries are currently at or near
their target band. They include India, Japan,
the Philippines, Indonesia and Vietnam.
Malaysia, which does not have a designated
inflation target band, has an even lower level.
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