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Figure 1-6: Inflation rate for Qatar's main
trading partners and economic zones (%)
1.1
5.6
-0.2
3.2
3.0
2.5
3.2
17.0
2.0
2.9
2.2
4.3
2.8
2.3
5.5
2.2
3.0
11.7
4.3
-10
0
10
20
30
40
50
China
India
Japan
Kuwait
Oman
Qatar
Saudi Arabia
Turkey
UAE
Germany
UK
USA
Advanced
Emerging Asia
Emerging economies
Euro area
G7 countries
Middle East & CA
World
2019
2020
2021 -estimate
Source: IMF - World Economic Outlook data, Oct. 2021
Part 1: Economic Outlook 2021 - 2023
31
particular the US Federal Reserve, the
European Central Bank, and the Bank of
England, maintained that the phenomenon
of price increases is temporary and is mainly
caused by: (1) unemployment problems, (2)
changing
qualifications
of
potential
employees and unwillingness to return to
their previous low-paid jobs
15
, or pressure on
parents to take care of children at home
instead of in nurseries and schools
16
, (3)
disruption of marine and land supply chains,
(4) increased aggregate demand. This
opinion was also echoed by the International
Monetary Fund in its recent WEO report for
the month of October 2021.
However, the rise in the inflation rate for all
countries during the month of October 2021,
including the United States of America by
6.2%, made monetary policy officials in
developed countries think seriously about
how to tighten economic policies. For
instance, Secretary of the Treasury Janet
Yellen, in an online Reuter’s webinar on 2
December 2021, noted that the word
“temporary” should perhaps no longer be
applied. In other words, inflation has become
a non-temporary phenomenon.
Therefore, economists and policymakers are
discussing what is the appropriate approach
and when to apply it, given that the speed of
returning to the practice of traditional
monetary policies is fraught with many risks,
as it requires preparing the markets,
especially the labor and financial markets,
gradually and according to the circumstances
of each country, because every economy has
different sources of inflation; for example, the
United Kingdom’s inflationary pressures are
driven, among other factors, by the
consequences of Brexit creating a shortage
of critical workers (including truck drivers), as
well as increased customs bottlenecks,
15
https://www.washingtonpost.com/business/2021/12/08/october-
employees-quitting-jolts/
requiring high costs and bureaucratic delays
to resolve, while the European Union is least
affected by the consequences of inflation,
since the influence of Germany as the largest
economy in Europe on eurozone inflation is
minimal, thus inflation in the eurozone
remains limited, as Figure 1-6 indicates.
However, no nation, or group of nations, can
thrive in isolation, and therefore it may
become the case that the European Union
will have to closely coordinate its monetary
policy with the expert opinions of the
International Monetary Fund, as well as the
economic policies of the United States of
America, which is in a difficult position having
to choose in trading off between growth and
inflation.
From the minutes of the Federal Open
Market Committee (Federal Reserve)
meeting held November 2-3, 2021, published
on November 24, 2021, followed by the press
release of December’s 2021 meeting, it is
likely that the United States will begin to
move gradually towards a tighter monetary
policy while being careful to ensure that the
financial market is not affected, because a
rapid move towards a conventional monetary
policy can cause significant damage to
financial markets, in particular, any abrupt
halt to the quantitative easing policy will
probably affect the prices of bonds and
stocks.
Therefore, the committee decided to seek to
implement a monetary policy to maintain the
inflation rate at 2%, and to maintain interest
rate stability during the next six months at a
rate ranging between (0 - 0.25%). The
Committee also agreed to quickly reduce
purchases of quantitative easing, starting
respectively in November and December
2021, by reducing $15 billion and $30 billion
16
https://www.nytimes.com/2021/10/30/business/paid-family-leave-
working-parents.html
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