Is it really with a feeling of siam and raising interest rates is the solution to reduce inflation? The interest rates strategy is good to combat inflation in the long run, but when a recovery does not occur in the market for two consecutive two, the more interest rate will put more fire on the oil.
It worked for the US it worked for Europe despite being in the small single-digit area, it has been proven a lot of times during the last century and there is little to debate, making money more expensive for borrowers drives down consumption and inflation, it's simply economics.
What is your recommendation to countries in such cases?
In Argentina's case?
Pretty simply, make a list of all the things that have been done by the government since the 50s last century, and don't do any of them again!
It will end far better than the current path. But more realistically, just flee the country, it's doomed to be in a perpetual loop of crisis.
The main cause of inflation is because a country is depending on other countries too much, depending on their services and products. The countries that is having inflation use more of their foreign reserves to buy from other countries and they increase the price of the local currencies to make the foreign currencies stronger and higher in price. Turkey dependent on other countries in Europe and other countries is the main cause of their problem.
Then, why is Japan not experiencing inflation despite being dependent on imports and why is the US having inflation when, d'oh, they can just print it?
Besides, how could Turkey be 20 times more dependent on imports than all the countries in Europe?
Inflation is simply a cause of more demand and less offer, we have just entered a period of consumption after the lockdowns and the industry with the broken logistics chains can't revamp production as easily as customers decide to spend money.
