How did Malaysia control inflation in the past?
i want to know the ways and how those ways worked.
Answer:
Malaysia had a fixed exchange rate for a long time. This means that it is doing nothing to control inflation. That is a passive monetary policy. In fact, it results in the same rate of inflation as the country that the currency is being pegged against. More recently, the ER has been allowed to float, and Malaysia is implementing an inflation targeting regime. That means it uses changes in interest rates -- up or down -- to control aggregate demand and inflation.
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Answer:
Malaysia had a fixed exchange rate for a long time. This means that it is doing nothing to control inflation. That is a passive monetary policy. In fact, it results in the same rate of inflation as the country that the currency is being pegged against. More recently, the ER has been allowed to float, and Malaysia is implementing an inflation targeting regime. That means it uses changes in interest rates -- up or down -- to control aggregate demand and inflation.
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