Some emerging countries are apparently making adjustments to their exchange rates, albeit slowly, in the awareness that importing easy monetary conditions from the United Sates by pegging to the U.S. dollar will further exacerbate inflationary pressure.
If the situation does not change dramatically and promptly, however, it is highly likely that in advanced economies, where growth potential is declining and inflationary pressures are tending to rise, the pace of recovery will continue to be restrained even under expansionary policies to stimulate aggregate demand. II.