LONDON/NEW YORK : More governments are seeking ways to prevent surging inflation whipping up economic trouble - and even public unrest - without raising interest rates.
"What the Turks are trying, honestly - I have never seen anything like it before," said AXA's chief economist Gilles Moec. Graphic: Turkey inflation seen hitting 55per cent by mid-year , https://graphics.reuters.com/TURKEY-INFLATION/lgvdwjjwepo/chart.pngA lack of trust in economic institutions - and the peso - has plagued Argentina for decades.
Goldman Sachs' Argentina economist Alberto Ramos says headline inflation has averaged 47.2per cent since July 2018, attesting to"significant macro policy dysfunction and the failure of the monetary authority in securing monetary control". Graphic: Argentina's annualized benchmark rate, https://graphics.reuters.com/INFLATION-DEBT/ARGENTINA/dwpkrkllgvm/chart.
But the Inter-American Development Bank and others have warned that such 'dollarisation' leaves those unable to obtain dollars with little access to basic goods, including food. Inflation peaked near 3,000per cent in 1990 and though it dropped to 433per cent in 1991 it was back to almost 2,000per cent by 1993.
Graphic: Highest inflation in Poland since 2000, https://fingfx.thomsonreuters.com/gfx/mkt/jnpwejryqpw/Pastedper cent20imageper cent201642196716841.png CONGO AND ZIMBABWE Price ceilings imposed by the government left sellers unable to make a profit, leading to major shortages. Dollar bank deposits were converted into pesos and a moratorium declared on debt payments. By year-end, all trade became regulated, full capital controls were adopted and banks were nationalised.
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