As for the employment and income situation, supply and demand conditions in the labor market have continued to improve steadily, as evidenced by the continued rise in the job openings-to-applicants ratios and decline in the unemployment rate to around 3.5 percent, and employees’ compensation has also picked up moderately.
It is well understood that currency depreciation creates inflationary pressures. But many emerging market countries have strong central banks who can deal with this problem. Given the credibility accumulated by these institutions, inflation expectations have stayed anchored in most emerging markets.1 Emerging markets have also been buffered by substantial stocks of foreign exchange reserves.