Drowning In An Ocean Of Money

Only a couple of years ago, with their countries in recession and with little portfolio investment coming in from abroad, Eastern Europe's money authorities had a simple tactic for fighting triple-digit inflation: They could crush domestic demand with blunt instruments such as tight credit and taxes. But life is more complicated now. As commercial activity grows brisk, central bankers face a new problem: Their currency policies are attracting so much foreign capital that it's all but impossible to bring inflation down by raising interest rates.

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