The Global Dangers of Rising US Inflation
At-risk economies may have six months or so to implement self-help measures before any sudden US monetary-policy tightening happens. They are well advised to work on making their exchange rates more flexible, reducing their reliance on foreign-currency debt, and increasing their foreign-exchange reserves.
NEW YORK – As US inflation continues to accelerate, with consumer prices increasing 5% year on year in May, it is not only the US Federal Reserve that needs to remain vigilant. Policymakers around the world – and in vulnerable economies in particular – also should prepare for the possibility that US interest rates will rise faster and sooner than most forecasts currently predict.