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Gov't blames itself for rising inflation...
Here's a headline you won't see every day!!
The link is at the bottom if you think I made this up...
Gov't blames itself for rising inflation
by Dylan Bowman and Reuters on Thursday, 06 December 2007
Higher government spending and more bank lending are driving domestic inflation, rather than more expensive imports through a weaker dollar peg, Bahrain's central bank governor has said.
"There is not sufficient proof that the fall of the value of the dollar contributed to the rise of consumer prices in the kingdom and inflationary pressure in the Gulf," said Rasheed Al-Maraj, quoted Arabic daily Al Ayyam on Thursday.
"Most of the pressure was from local issues tied to an increase in government spending, together with an increase in market liquidity and hence an increase in loans," the newspaper said, paraphrasing the governor's comments
Al-Maraj's comments contrast with the common perception that inflation in the Gulf is being driven by the rising cost of imports caused by the tumbling dollar to which all the GCC states, except Kuwait, have their currencies pegged.
Kuwait took the decision in May to depeg its dinar from the dollar, pointing to the rising cost of imports as one of the main factors fuelling inflation.
Bahraini inflation is expected to be 2.9% this year according to the International Monetary Fund (IMF), but other Gulf states are experiencing much higher rises in the cost of living, which is putting increasing pressure on central banks to either revalue their currencies against the dollar or drop their pegs altogether.
Annual inflation in Saudi Arabia accelerated in September to 4.8%, the highest level in at least a decade, inflation accelerated to almost 14% in Qatar at the end of the third quarter, while inflation stood at 7% in Oman and 6.2% in Kuwait in September. In the UAE inflation hit 9.3% last year.
Al-Maraj said Bahrain had no plans to change its monetary policy.
We do not see any reasons at the moment to change our currency policy in regards to the US dollar, and we do not see any negativity from the dollar... despite its change in value in past years," Al-Maraj is quoted as saying.
Al-Maraj's comments echo those of other Gulf central bank governors, who have all backed the falling dollar and claimed there is no planned shift in policy.
However, their remarks have done little stop speculators driving GCC currencies up to record highs on bets that revaluations or removal of dollar pegs are imminent.
Analysts have said on numerous occasions that it is not a matter of if, but rather when Gulf states change their monetary policies
http://static.arabianbusiness.com/50...nflation?ln=en
Here's a headline you won't see every day!!
The link is at the bottom if you think I made this up...
Gov't blames itself for rising inflation
by Dylan Bowman and Reuters on Thursday, 06 December 2007
Higher government spending and more bank lending are driving domestic inflation, rather than more expensive imports through a weaker dollar peg, Bahrain's central bank governor has said.
"There is not sufficient proof that the fall of the value of the dollar contributed to the rise of consumer prices in the kingdom and inflationary pressure in the Gulf," said Rasheed Al-Maraj, quoted Arabic daily Al Ayyam on Thursday.
"Most of the pressure was from local issues tied to an increase in government spending, together with an increase in market liquidity and hence an increase in loans," the newspaper said, paraphrasing the governor's comments
Al-Maraj's comments contrast with the common perception that inflation in the Gulf is being driven by the rising cost of imports caused by the tumbling dollar to which all the GCC states, except Kuwait, have their currencies pegged.
Kuwait took the decision in May to depeg its dinar from the dollar, pointing to the rising cost of imports as one of the main factors fuelling inflation.
Bahraini inflation is expected to be 2.9% this year according to the International Monetary Fund (IMF), but other Gulf states are experiencing much higher rises in the cost of living, which is putting increasing pressure on central banks to either revalue their currencies against the dollar or drop their pegs altogether.
Annual inflation in Saudi Arabia accelerated in September to 4.8%, the highest level in at least a decade, inflation accelerated to almost 14% in Qatar at the end of the third quarter, while inflation stood at 7% in Oman and 6.2% in Kuwait in September. In the UAE inflation hit 9.3% last year.
Al-Maraj said Bahrain had no plans to change its monetary policy.
We do not see any reasons at the moment to change our currency policy in regards to the US dollar, and we do not see any negativity from the dollar... despite its change in value in past years," Al-Maraj is quoted as saying.
Al-Maraj's comments echo those of other Gulf central bank governors, who have all backed the falling dollar and claimed there is no planned shift in policy.
However, their remarks have done little stop speculators driving GCC currencies up to record highs on bets that revaluations or removal of dollar pegs are imminent.
Analysts have said on numerous occasions that it is not a matter of if, but rather when Gulf states change their monetary policies
http://static.arabianbusiness.com/50...nflation?ln=en
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