Читать книгу The Political Economy of the BRICS Countries - Группа авторов - Страница 24

At the current juncture, out of the five BRICS countries, three economies (viz., Brazil, India, and South Africa) have adopted inflation targeting as the framework of the monetary policy. This is in sync with the global fashion of adoption of inflation targeting in order to rein in inflation and fiscal profligacy as well as to assert a certain degree of independence of central banks. While for the most part, the Bank of Russia has had several goals for its policy, there was a gradual shift toward full-fledged inflation targeting since early 2015, abandoning the exchange rate targets in November 2014 (Korhonen and Nuutilainen, 2017). China is perhaps the only country in the block which continues to adopt a multiple indicator approach but an implicit exchange rate targeting (Table 2).

In the context of monetary policy, a discussion on inflation is in order. There are several difficulties in comparing inflation rates across the BRICS countries. First, inflation numbers for the Russian Federation are not available till 1993. Second, both Brazil and Russia had experienced astronomical inflation rates during the 1990s. Illustratively, during 1990–1995 Brazilian inflation rate was 1,400%, and it started tapering off since the mid-1990s; similarly, inflation for Russia during the 1990s was more than 200%. In fact, Brazil had yearly inflation rates well above 1,000% from 1989 (except 1991) until the Real Plan stabilized inflationary momentum (Garcia et al., 2019).⁵ While such a hyperinflationary trend in Brazil was reflective of unbridled monetary expansion, in the case of Russia, removal of long-maintained price controls and dismantling of the erstwhile socialist regime seemed to have played major roles. Figure 3 plots inflation rates for India, China, and South Africa since 1991 and for Russia and Brazil since 2000. It appears that at least in the recent past inflation did not turn out to be a major problem in these countries.

Table 2:Monetary policy framework in BRICS countries.

Source: Khundrakpam (2012) and respective central banks’ websites.

Figure 3:Consumer price inflation in the BRICS economies (% per annum).

Source: Calculated from World Economic Outlook Database, April 2018, IMF.

Table 3:Exchange rate and monetary policy regimes in BRICS countries.

Exchange Rate Arrangements	Monetary Policy
Monetary Aggregate Target Framework	Inflation Targeting Framework
Other Managed Arrangement	China	—
Floating Exchange Rate	—	India, Brazil, South Africa
Free Floating	—	Russia

Source: IMF (2016).