BIS says theory behind EME policy must catch up with ‘reality’

Situation is similar to adoption of inflation targeting in early 1990s, says BIS annual report

Claudio Borio
Claudio Borio, BIS

Many emerging market economies (EMEs) have successfully tamed inflation, but their use of a mix of inflation targeting, currency interventions and capital controls does not yet have a strong theoretical basis, says the Bank for International Settlements.

The BIS’s annual economic report, published on June 30, notes the situation is similar to the early 1990s, when advanced economies adopted inflation targeting – as early as 1990, in the case of the Reserve Bank of New Zealand.

The theoretical

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