These increases, which are particularly hard on the poorest, could be countered by currency appreciation, which is necessary in any event in order to reduce global payments imbalances. In the absence of such appreciation, monetary policies in these countries are becoming more restrictive. In the advanced economies inflation is dampened for the time being by the ample margins of spare capacity.
In the United States, the Federal Reserve recently confirmed its plan of last November to increase liquidity by purchasing Treasury paper. In the euro area, consumer price inflation, driven up by the sharp rises in commodity prices, in January widely overshot the definition of price stability fixed by the ECB Governing Council.