Reducing capital inflows has hidden cost, says Chilean governor

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Rodrigo Vergara, governor of the Central Bank of Chile, has warned countries about the hidden costs of using unorthodox monetary policy in emerging markets as a shield against capital inflows from developed markets.

Speaking at an Institute of International Finance meeting in Tokyo on October 19, Vergara said the interest rate cuts seen in many advanced economies was a "healthy and necessary policy" but was causing increased capital inflows to emerging markets and an appreciation of their

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