Why low rates of Inflation can promote growth and development.
- It leads to more efficient allocation of resources, as . relative prices are not distorted by the average rising prices.
- It stabilizes; currency enabling it to buy more goods and services than when inflation is high.
- It stabilizes the exchange rate which helps investors, importers and exporters.
- Low inflation increases the competitiveness of the exports due to their low prices.
- Low inflation increases confidence in the economy, which can help to attract foreign investors.
- It keeps interest rates low which encourages borrowing for investments.