Inflation has become a global challenge and a threat to economic stability, the IMF' Deputy Managing Director John Lipsky said. Inflation fueled by Rising prices of both energy and commodity has become a major concern.
Demand for commodities in the emerging economies such as India and China grew at a faster pace. Higher demand for oil by the developing nations added to global oil prices, which reached all time high.
In a speech at the Council on Foreign Relations Mr. Lipsky identified the problems of comparatively lower rate of interest rates and its influence on inflation. He also called on Governments to step forward to encourage investments in the energy sector, reduction of biofuel subsidies, and improvement in agricultural policies. The IMF is also working to help developing nations who are worst affected by the commodity hikes and to develop strategies which can be adopted by its member countries.
It is anticipated that the problem of inflation will soon be checked. Both slowdown in US economic growth and rising unemployment will help to check inflation.
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