An article from the Economist tracks monetary policy in where they call "Hikelandia", which is Brazil, Chile, Hungary, New Zealand, Norway, Peru, Poland and South Korea. In these countries, central banks have started raising interest rates before and more forcefully than America’s Federal Reserve. They found that there was very little evidence that this lowered inflation rates. Core inflation hit a high of 10% while output is shrinking. Core inflation in Brazil is actually falling, but in Hungary, core inflation rose from 19% to 25% in a five month period. They are estimating that that the prices of more than one-fifth of Hikelandia’s inflation basket are rising by 15% or more.
https://www.economist.com/finance-and-economics/2023/02/02/super-tight-policy-is-still-struggling-to-control-inflation
This seems concerning as it indicates the continued rise in interest rates in the United States may not yield the desired outcome for the Fed and they may need to devise a new policy strategy. It will be interesting to see what direction they go if this trend continues.
ReplyDelete