The US Fed has increased the fed funds target rate to its current level of 5,0 per cent, from 1,0 per cent at the start of the tightening cycle, and the general expectation is that it might be close to its peak.
However, we should all recognise that short-term expediency could take precedence, and eventually turn back the clock on an open, flexible system. This risk grows more tangible as emerging economies become more systemically important. A Code of Conduct for Capital Flows could include the following four elements to guide countries during the transition to the long-term system: 1.