Galloping inflation


Galloping inflation - a significant increase in the average price level in the economy reaching up to several tens of percent per year. In an economy in which galloping inflation occurs, the protection of the real purchasing power of money is very difficult (basic financial market instruments offer lower interest rates than inflation).

The real interest rate is very negative, which causes a reluctance to place savings on deposits, but rather to speculative investments, for example in foreign currencies, and encourages borrowing for the longest possible term at a fixed interest rate.

With the inflation of galloping (unlike hyperinflation), there is no complete loss of confidence in the national currency - it is possible to reduce inflation using the monetary policy tool without changing the currency. Bibliography

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