The growth rates in emerging and commodity-exporting economies are still at high levels, but these have recently been slowing somewhat mainly due to the heightened inflationary pressures and associated monetary tightening. In China, the year-on-year rate of increase in the consumer price index (CPI) was 6.4 percent in June 2011, up substantially from the 2.9 percent exhibited a year ago.
In response, the People’s Bank of China has raised the renminbi benchmark rates five times since October 2010. Other emerging economies have also raised interest rates, but in many cases the real short-term interest rate, which subtracts the inflation rate from the nominal interest rate, is significantly below the long-term trend of the economic growth rate.