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Asia’s Inflation Trap

NEW HAVEN – Asia has an inflation problem. The sooner it comes to grips with its problem, the better. Unfortunately, the appropriate sense of urgency is missing.

Willingness to tackle inflation is impeded by Asia’s heavy reliance on exports and external demand. Fearful of a relapse of end-market demand in a still-shaky post-crisis world, Asian policymakers have been reluctant to take an aggressive stand for price stability. That needs to change – before it’s too late.