Sunday, February 11, 2007

1281% Annual Inflation in Zimbabwe

NY Times article "As Inflation Soars, Zimbabwe Economy Plunges"

The trigger of the country's crisis — hyperinflation — reached an annual rate of 1,281% this month, and has been near or over 1,000% since last April (see graph above). Hyperinflation has bankrupted the government, left 8 in 10 citizens destitute and decimated the country’s factories and farms.

The central bank’s latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30, anyone who raises prices or wages will be arrested and punished.

MP: Perhaps instead of "declaring inflation illegal" (isn't that like declaring high temperatures in August "illegal"), Zimbabwe should follow New Zealand's approach to monetary policy:

"The Reserve Bank of New Zealand Act sets out an ambitious framework for setting monetary policy goals and holding the Governor to account for the conduct of monetary policy. The framework is built around the provisions that make the Governor the single decision maker, and allow the Governor to be dismissed for inadequate performance."


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