Long-term interest rates have recently begun to return to more normal levels, consistent with the strengthening U.S. economy and the anticipation that the U.S. Federal Reserve will begin to exit from its unconventional monetary policy. But it’s important to make the distinction between policy tightening and a slowing of the rate at which additional stimulus is being provided.
As a result, as with most – if not all – countries, the domestic inflation environment has become more challenging. In June 2008, inflation stood at 11.4 percent compared to 2.3 percent in the same period last year, bringing the average inflation for the first six months of 2008 to 7.6 percent.