Fighting inflation is Asia’s top priority according to our web poll last week. We asked readers to choose from the conference’s four main topics: tackling rising food and energy prices, climate change, poverty reduction and reforming the international monetary system.
Inflation was comfortably the most popular choice — and addressing climate change was the least popular. That makes sense. India, Malaysia, the Philippines and Vietnam all raised interest rates last week as they struggle to bring rising prices under control.
In Malaysia, inflation has returned with a vengeance after a brief respite since last July. The central bank has said that prices could rise anywhere between 2.5% and 3.5%, after an average last year of 1.7%. It is the same story throughout the region.
However, even though it is also the same story in the US, interest rates remain at zero. Ben Bernanke indicated on April 27 that he would hold them there for at least two Fed meetings, which extends through to September.
Inflation meanwhile is roaring ahead. If inflation rises quickly, it is hard to see how Bernanke will be able to raise rates quick enough to control rising prices. Indeed, the import-price index is up 11% since last year. With interest rates at rock bottom, Bernanke is in danger of doing too little, too late.