Asia-Pacific governments grapple with capital inflows

05/8/2013 | Wall Street Journal, The

Sustained inflows of capital are posing a problem for governments across the Asia-Pacific region as they each act to cool things down and limit the effect on their currencies. But the steps needed aren't necessarily obvious. "The dilemma these central banks face is they could respond to inflows by cutting interest rates ... but in some economies you have overheating risks and asset bubbles" that would be made worse with easier monetary policy, said Stephen Schwartz, a BBVA economist in Hong Kong.

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