2012년 7월 12일 목요일

Dic# commodity prices, international index of commodity prices

자료 1: 파란사전 (원출처: 동서문화PASCAL)


국제상품가격지수(international index of commodity prices): 런던에 본사가 있는 세계적 대통신사의 하나인 로이터통신사에 의하여 작성되는 1차산품에 관한 국제가격지수. 로이터지수라고도 한다. 세계의 상품시세의 움직임을 나타내는 정보로 널리 이용되고 있다. 지수를 구성하는 품목은 쌀·소맥·콩·땅콩·옥수수·코코아·코프라·커피·면화·설탕·쇠고기·양모·고무·구리·아연·주석·흑연의 17개 상품이고, (... ...)


자료 2: After the Crisis: What Next in 2011 and 2012?, Allen Sinai (세계경제연구원·한국무역협회, 2011년 2월)

(...) A second risk is China’s attempt to disinflate. Even though it is dynamically strong, it grows faster than the Chinese government and the People’s Bank of China would like. Thanks to its growth, and the strong growth of other countries in the region, commodity prices have risen, and this part of inflation is showing up in the inflation indices of a number of countries in Asia. (...)

(...) If the Fed achieves its goals there will be more demand, and commodity prices will rise. Investors should buy commodities before that happens. The printing of money suggests more dollars in the currency system, so the dollar should be sold and currencies which have promise should be bought. (...)


Q: The raising of interest rates as a mechanism to stem inflation is a hot topic in Korea. I understand why the same action in China or the United States can have an effect on demand for commodities but, as Korea is not a producer of commodities and is not a major driver of commodity prices globally, I do not understand how raising interest rates in Korea will have any direct effect on reducing inflation in Korea, unless it is to drive up the strength of the currency, and therefore effectively change the reference price. Of course, that translates into less competitive exports and a slowing economy. So are we basically saying that, by raising interest rates to effect inflation in Korea, we should just slow the economy from 5% to 3%? Can you comment on this?

A: If inflation is being driven by food and energy prices and central banks clamp down using interest rates to stem that inflation, but have no or very little effect on the source of that inflation, then that inflation can continue, the economy can weaken, and the interest rate hikes do not do much. But there is not much choice available for a central bank. If the central bank does nothing it loses credibility, and inflation may spread to other parts of the economy. If interests rates are raised too high, and the source is this outside kind of inflation, then the risk becomes overdoing it which is the risk China runs. The preferred strategy is to step out in a gentle way against inflation and to periodically raise short term rates. An obvious implication of interest rate hikes has to be an understanding that the currency of the country may rise but the strategy would be to try to make that a gradual process. The currency does have to go up, and that is part of the gentle braking process. The central bank lets everyone know that it stands against inflation and inflation expectations decrease. If inflation does not fade then the central bank has to devise a different strategy. This is the strategy in Korea, as I perceive it, with one extra dimension which I think is wise. This is to take actions on the supply and demand side in the markets where the inflation is occurring. It is tricky business. History generally does not treat price fixing favorably, but taking actions to induce an increase in supply or to slow down demand is a good medicine to try. The art of economic policy making is a lot like the art of medicine. It is complicated, but so far South Korea and China are attempting the right thing. The problem with China is that the currency is extremely undervalued. The won is not extremely undervalued. It has been kept lower than it would otherwise be through periodic interventions, and it will go higher, but this is a sign of strength not of weakness. The private sector, to be competitive when it is losing competitiveness on the price side, has to become more productive.

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