Emerging markets need to adopt a combination of measures against inflation

' Emerging markets will also face pressure from capital inflows in 2011, which will give these governments more serious challenges in dealing with inflation policies, ' said Ann Wyman, an emerging market economist for Nomura Securities, in a media interview in Beijing.　　Unconventional, modular policies would be a common tactic for these markets to deal with macroeconomic problems instead of simple interest rates, she said. Wyman said emerging market capital inflows in 2011 would continue to be driven by the following factors: first, many economies in emerging economies will continue to experience higher growth rates than Europe, the US and many advanced economies. At the same time, another driver of capital inflows is the low interest rates in the US and Europe, particularly the second round of quantitative easing last year, which has led investors to look for higher yields in emerging markets.　　The influx of investors into emerging markets has also brought further upward pressure on emerging market currencies. As "hot money" flowed in, inflation in emerging markets was on the rise. The rise in commodity prices is the main reason for inflation, including food and energy, which have accelerated over the past year, particularly in recent months.　　At the same time, 2011 years of growth in emerging economies is expected to slow, as growth in emerging economies has experienced a strong rebound in 2010, with Brazil slowing from 7.5% in 2010 to 4.4% in 2011 and Russia slowing from 3.8% to 3.5%. Wyman that the resultant combination of factors has created a very challenging environment for policymakers in emerging market economies. On the one hand, strong capital inflows in some emerging market economies, coupled with the pressures of currency appreciation, have made them more likely to lose competitiveness in Asian economies with less flexible exchange-rate policies.　　At the same time, they have to deal with their own inflationary pressures, so the response we will call "unconventional, non-traditional or postmodern" is now tending to a combination of multiple policies to solve the problem, rather than just changing the interest rate policy to deal with inflation. Some economies have even bypassed interest rate policies in response to inflation, and there has been an extreme case of interest rate cuts. Turkey, for example, has lowered interest rates to prevent further inflows of foreign capital, and has taken other measures to tackle inflation, such as a substantial increase in the reserve requirement ratio. Many emerging economies have raised bank reserve requirements. Other emerging market economies have adopted so-called macro-prudential policies, such as Brazil's macro measures to limit credit growth and wage growth.　　In addition, emerging market economies are taking more capital controls and intervening in the currency markets to defuse the pressures of currency appreciation. Wyman warns that the consequences of these policies are difficult to predict because of the considerable uncertainty surrounding non-traditional policies. If used improperly, it may even cause political unrest outside the economic sphere, especially when inflation is out of controlWaiting。　　This is a problem that emerging market economies must face seriously. For the Chinese economy, Nomura Asia economist Mr. Subbaraman said China is facing greater inflationary pressures this year, with a cumulative rate of 100 basis points expected to rise in the year and a possible 125 basis point next year. To tackle inflation over the long term, China must increase the efficiency of its capital and labour use to achieve sustained economic growth at lower inflation levels.