UAE facing second-round effects of faster inflation, Central Bank Governor says

Dubai: The UAE is facing “second-round effects'' of faster inflation, Central Bank Governor Sultan Bin Nasser Al Suwaidi said in a speech to the International Monetary Fund, the Saudi Press Agency reported.

“Despite limited pass-through of higher food and fuel prices, indications are growing of possible second-round effects,'' Al Suwaidi was quoted as saying in a speech in Washington on Saturday by the state-run news agency.

Inflation in the UAE accelerated to a record 11.1 per cent in 2007 on higher rents and food costs.

“Managing inflationary pressures is especially complicated by the currency peg to the US dollar in the context of divergent cyclical positions,'' Al Suwaidi said. “To this end, the authorities have increased reserve requirements in several instances, while tightening measures and controls over credit growth.''