On their quest to quell inflation by hiking interests, central banks and governments forgot the importance of maintaining stable currencies, said Steve Forbes, chair of Forbes Media.
The British pound shed 4% to an all-time low of $1.0382 on Monday in Asia, following last week’s announcement by the new U.K. government that it would implement tax cuts and investment incentives to boost growth.
Currencies are weakening against the U.S. dollar as interest rates in the United States continue to surge. The Chinese yuan and Japanese yen also plunged heavily as the two economies held on to accommodative monetary policies more than the U.S.
“No central banker today — hardly any — talks about stable currencies. It’s about depressing the economy to fight inflation,” Forbes said at the Forbes Global CEO Conference in Singapore on Monday.
He added many economists and policymakers have stuck to a standard “dogma” or mindset of targeting inflation by hiking interest rates and failed to look beyond that, such as by taking steps to shore up currencies.
