From+growth+first+to+war+on+inflation+-+Raymond


 * From "growth first to "war on inflation **
 * Economist: http://www.economist.com/blogs/asiaview/2011/01/south_korea_raises_interest_rates
 * January 16, 2011
 * Interest rates have been constantly increasing throughout East and South-East Asia. South Korea has implemented a "growth first" stance, in which the President has attempted to fix inflation by lifting interest rates. This can be seen as a government attempt to "reconnect" with the working class. South Korea's buoyant stock market, impressive GDP growth and the pressure from inflation, it is predicted that there will be many more cases of monetary tightening this year. Lately, South Korea has introduced measures to limit the currency's rise. However, these measures seem to be having a limited effect, since rising interest rates attract foreign investors.
 * Vocabulary:
 * Interest Rates: The price of money. Interest is what you pay when you borrow money and what you are paid when you lend your money to someone else.
 * Inflation: A rise in the general level of prices of goods and services in an economy over a period of time.
 * GDP: Gross Domestic Product - GDP is the value of total production of goods and services in a country over a specified period, typically a year.
 * Economic Growth: A term used to indicate the increase of per capita gross domestic product (GDP) or other measure of aggregate income.








 * While the article discusses South Korea's monetary tightening policy as a solution to inflation, I believe that the problem lies in inflation being more a supply-side than a demand-led problem. However, overall I agree with the decision by South Korea to increase interest rates since the sooner they are raised, as economic activity recovers, the less interest rates will have to be increased later on to maintain price stability.