INTHEBLACK October/November 2024 - Magazine - Page 20
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F E AT U R E
“Central banks should focus firmly on domestic conditions
and avoid making decisions overly dependent on the expected
path of US interest rates. While following the Federal Reserve
could limit exchange rate volatility, the risk is that central
banks could fall behind or move ahead of the curve and
destabilise inflation expectations.”
KRISHNA SRINIVASAN, INTERNATIONAL MONETARY FUND
Mainland China’s inflation rate is just
1 per cent, while Thailand’s is lower at
0.7 per cent.
International Monetary Fund economist
Krishna Srinivasan says, “In some advanced
economies – notably New Zealand, Australia
and Korea – persistent services inflation has
kept inflation above target.
20 INTHEBLACK October/November 2024
“By contrast, consumer prices have fallen
in Thailand and [Mainland] China.
“Inflation excluding food and energy is low,
which, in [Mainland] China, reflects legacy
issues from the pandemic and the property
sector correction. Elsewhere, inflation is close
to target. This means that countries need
differentiated policies.”
Srinivasan says that in economies where
inflation is still elevated, central banks may
need to keep interest rates higher for longer.
In economies where core inflation is at or
close to target, space for lowering interest
rates may emerge later in the year.
By contrast, where inflation is undesirably
low, such as in Mainland China, he says an
accommodative stance is called for.
“Central banks should focus firmly on
domestic conditions and avoid making
