30 June 2008

Central bankers warn of inflation scourge

This article is excerpted from the 30 June 2008 edition of the “Toronto Star”.

Central bankers issued a stern warning yesterday against the dangers of surging inflation, saying rising energy costs risk damaging growth in rich and poor countries alike.

Policymakers attending talks at the annual meeting of the Bank for International Settlements said they were on high alert to the dangers posed by rising inflation and slowing growth, but there was no one-size-fits-all solution….

Officials from more than 100 central banks exchanged views on the global economic outlook on the weekend and agreed oil prices – which surged past $142 a barrel (U.S.) for the first time last week – were a major concern.

In emerging economies, where consumers spend more of their income on food than in industrialized nations, inflation is no longer just a monetary policy problem but a social one….

Chinese central bank governor Zhou Xiaochuan said he expected some domestic inflation pressures in the world's most populous nation to ease due to a good harvest.

"However, we know the international price of energy and other commodities, they add additional pressure to inflation in China," he told reporters on the sidelines of the meetings.

Even countries like the United Arab Emirates, enjoying surging revenues from oil exports, say oil prices have gone too far.