The difficulty of reaching agreement in the Doha Round of trade negotiations highlights the risk of renewed protectionism. Trade barriers reduce both domestic and international competition, one of the key factors behind low inflation, and make all countries poorer. Barriers to free flow of goods, services, and capital would also diminish the force of other factors outlined above that help to reduce inflationary pressures.
We must not forget the examples of high inflation and hyperinflation from the past: They hold important lessons about the costs of not maintaining price stability. That sound policies are the basis for solid economic growth should not be forgotten.