While China, Indonesia and Russia have relatively higher capacity to use monetary and fiscal policies to support growth, Egypt, India, Brazil and Poland have the less room for a stimulus3. 18. There is another line of thinking which suggests that in the event of weak consumption and investment demand, EDEs would need to discover innovative ways of boosting aggregate demand in a non-inflationary manner.
Inflation in the euro area and United States is still trending downwards, and spare capacity could be expected to dampen price changes for some time yet, though rising commodity prices will work the other way. For much of Asia, on the other hand, the period of disinflation caused by the downturn may be past.