Sleeping (with) inflation?

More intense globalisation means that countries could effectively “export” inflation to another country by shifting production abroad. Macroeconomic priorities should then be about exchange rate management and tariff cuts to achieve domestic price stability.

REMEMBER the “zero inflation” campaign in the mid-1990s? It took place when the Malaysian economy witnessed consistently high levels of gross domestic product (GDP) growth, as well as declining inflation, unemployment rate and debt-to-GDP.

It appears that Malaysia holds the low-inflation mantra close to its chest to this very day. Raising inflation is highly undesirable and even contributed to the Barisan Nasional government’s historic defeat in the 14th General Election, scapegoating the goods and services tax as the sole culprit.