exchange rate regimes and monetary policy in a global inflationary environment
the recent episode of global inflation is a reminder that no country lives in isolation. like other external economic shocks，inflationary pressure too could pass through to domestic economies. in june，inflation in the united states climbed to a 40-year high，rising 9.1% over the last 12 months，as measured by consumer price index (cpi). in the same period，the euro zone inflation continued to set historical record at 8.6% for the entire bloc，as measured by harmonized cpi. meanwhile in china，the signals were more mixed，with cpi rising 2.5% to a 23-month high，despite producer price index (ppi) sets a 15-month low，largely due to the pandemic disruptions.
inflationary pressure among large economies creates uncertainty for the rest of the world，as cross-border trade linkage and capital flow have important domestic implications for other countries’ currency and monetary policies. this uncharted territory of global inflation calls on central banks around the world to take a differentiated and flexible approach to navigating inflation under different exchange rate regimes and domestic constraints.
exchange rate regime: one size does not fit all
evolution of theoretical foundation for optimal exchange rate
