More notable, however, is that the Mexican government can borrow in pesos at a thirty-year maturity at only 8 percent. Although Mexico is perhaps the most striking example, it is not alone. Other middle-income emerging markets with single-digit yields on fixed-rate ten-year bonds in the local currency include Chile, Colombia, Malaysia, Russia, and Thailand, to name but a few.
In our April forecast, the Bank projected an additional 30 per cent increase in the prices of non-energy commodities over the next few years. The second limit relates to the challenges of derivative monetary policy. Owing to managed exchange rates, many emerging-market economies are acting as if U.S. monetary policy were appropriate to their circumstances.