Fernando Rugitsky, Phenomenal World, 21 Feb 2025
Central banks are back in the spotlight. After more than three decades of low inflation in rich countries, the rise in prices observed between 2021 and 2023 forced academic discussions into the public sphere. Such debates are not restricted to technical economic issues but deal explicitly with the politics of central banking. In the recent case of the United States election, for instance, more than a few commentators pointed at inflation to explain Donald Trump’s victory. Some went further, arguing that inflation explains a general anti-incumbent bias in recent elections across the globe.
Economies south of the Equator were also subjected to the inflation wave, but their particular situation exposed different challenges faced by their inflation-targeting central banks. If the debates over monetary policy in the North have revealed to some degree the narrowness of interest rate policy in managing inflationary tensions, the particular constraints of Southern countries expose the limits of conventional monetary policy even more starkly. Placed below the rich economies in the currency hierarchy that structures the international monetary system, peripheral countries face distinct challenges—namely, vulnerability to global financial cycles and the difficulty of asserting monetary autonomy.
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DGL comments: While not explicitly addressing health issues, this commentary on inflation, interest rates, capital flows, and the vulnerabilities of countries on the economic periphery throws light on health care funding, privatisation, and the social determination of health.
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