How to Save Emerging Economies from Another Crisis
With US monetary policymakers unwilling to consider their decisions’ international repercussions, emerging economies have little choice but to attempt to limit their exposure to US policy. To this end, they may reduce their use of dollars – a trend that is already gaining traction – or limit capital mobility.
SEOUL – As the world grapples with an inflationary surge fueled by the COVID-19 pandemic, Sino-American trade frictions, and the war in Ukraine, the United States has settled on its response: interest-rate hikes. But, while this may help the US beat back price growth, higher US interest rates intensify inflationary pressures for others, especially emerging economies.