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Global inflation: Aggressive monetary tightening is not inevitable

Alternatives to tightening, including global coordination, must be explored

Illustration: Binay Sinha
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Illustration: Binay Sinha

T T Ram Mohan
When the United States sneezes, the rest of the world catches not a cold but pneumonia. That is the bleak message from UNCTAD’s latest Trade and Development Report.
 
America’s Federal Reserve has been aggressively raising interest rates in order to fight inflation. All other economies have had to follow suit in order to keep their currencies afloat.

The UNCTAD report cites a study that shows that 1 percentage point increase in interest rates in the US reduces gross domestic product (GDP) by 0.5 per cent in advanced economies and by 0.8 per cent in emerging economies after three years. The 3
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

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