Log in
Show password
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Dynamic quotes 
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Asia faring better in staving off inflation risk, says BIS executive

12/06/2021 | 07:46am EST
A man passes the city skyline during the coronavirus disease (COVID-19) outbreak, in Singapore

TOKYO (Reuters) - Asia is faring much better than other regions in averting a jump in inflation caused by supply shocks, and is less vulnerable to an unwelcome wage-driven spike in prices, Bank for International Settlements (BIS) head of research Hyun Song Shin said.

In the United States and Europe, a sharp increase in demand for manufactured goods has led to supply chain shocks and pushed up inflation as economies re-opened from COVID-19 lockdowns.

For these regions, the key to the price outlook would be whether the labour market will tighten enough to trigger a "wage-price spiral", in which rising wages lead to entrenched inflation, Shin told Reuters in a recent interview.

As long as such wage-price spiral does not take off, price rises for durable goods would subside in the short-term, he said.

"But it's a bit of a race against time, because if inflation persists, then of course this kind of inflation will feed into wage-setting," he said. "If that's sufficient to generate a kind of spiral, that would be an outcome we have to watch out for."

The U.S. Federal Reserve has signalled a faster wind-down to its bond-buying programme on the possibility that inflation may not recede in the second half of next year.

Asia has been an exception and weathered the supply shock well with inflation "non-existent, very low", Shin said.

One reason could be that companies in Asia maintained jobs more than their counterparts in other regions throughout the pandemic's initial shock, allowing them to forgo wage hikes to lure back workers once their economies re-opened.

"One line of argument that's important to look for is how the firm-worker relationship was maintained through the initial COVID shock" in Asia, Shin said.

"Those countries that maintained that relationship well have managed to navigate the challenges better."

(Reporting by Leika Kihara; Editing by Alex Richardson)

By Leika Kihara

ę Reuters 2021
Latest news "Economy & Forex"
06:24aUK manufacturers plan biggest price rises since 1977 - CBI
06:23aTech-heavy nasdaq composite set for worst start to the year sinc…
06:21aIliad launches fixed-line broadband in Italy
06:20aAbu Dhabi's ADNOC forms unit to monitor debt markets, eye funding opportunities
06:16aClimate change 'steroid' contributed to $130 billion in insured losses last year-Aon
06:14aCannabis compound CBD stops coronavirus in test tube, but can it treat COVID?
06:12aEasing supply bottlenecks give German business 'glimmer of hope'
06:12aMalaysia former PM Mahathir has improved appetite, but staying in hospital - daughter
06:11aGold drops as Fed set to lay out rate hike path; Ukraine fears curb losses
06:10aIndonesia runs early tests to produce palm oil gasoline
Latest news "Economy & Forex"