They did not need to hike interest rates to save the currency and soothe investors.
If the Fed delays too long, it will be forced to hike interest rates much more to fight that insidious inflation.
Thus, Bernanke does not want to create a triple-whammy hit to the economy by beginning to hike interest rates too soon.
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The stock market looked overvalued in early 1998, with a currency crisis under way in Asia and Alan Greenspan beginning to hike interest rates.
In the short term, he says that the Federal Reserve's continued campaign to hike interest rates could bring on a recession or act to ignite inflation, rather than to dampen it.
Apprehensions about the activities of the Chinese government, including talk that it might hike interest rates to dramatically slow its globally important economy and ward off threatening excessive inflation in China.
Interestingly, there is also a Plan C spelled out, if low growth is combined with high inflation - because we've underestimated the long-term damage done by the crisis (ie over-estimated the output gap) - hike interest rates and increase austerity.
The European Central Bank has raised rates, the Bank of England is expected to do so later this year and the US Federal Reserve is tipped to hike interest rates for the 17th time in a row at the end of June.
We still just about see a 25 basis point hike in interest rates next month.
But even if the single currency's strength is not enough to prompt intervention, it may delay a hike in interest rates.
Then there will most likely be a hike in dividend and interest income tax rates as well as capital gains.
Some analysts had expected a more dramatic measure an interest-rate hike but the central bank left rates where they were.
The Bank tried to play down the bad news on inflation, ascribing it to the hike in indirect taxes in July's budget and (for the headline rate) the recent increases in interest rates.
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