The Banking Executive Magazine - July 2022 Issue

Back to Basics fensively for the time being. Growth stocks are particularly sensi- tive to rising interest rates because fund managers typically use dis- counted cash flow models to deter- mine their price targets for growth stocks. Future cash flows are consid- ered less valuable when the dis- counted rate is higher. Inflation rates are forcing investors to shift their focus from accommodative monetary policies to underlying fun- damental valuation metrics. Financial experts foresee that price volatility will continue and policy measures should be adopted to con- trol inflation. RECOMMENDATIONS FOR ARAB BANKS Based on the above overview of ris- ing world inflation rates and the ex- perts future forecast of continued ris- ing inflation and prices fluctuation, we recommend Arab banks and au- thorities to address the inflation prob- lem and resolve it from its basic root causes by developing: • a resilient monetary policy frame- work: central banks in Arab coun- tries should adopt a resilient monetary policy framework that can help in reducing inflation grad- ually over time and reducing its harmful impact. • hedging financial instruments: Arab banks including Islamic banks should develop financial in- struments to hedge against infla- tion. • Artificial Intelligence (AI) monitor- ing and decision support tools: central banks and financial institu- tions in Arab banks as well as fi- nancial technology companies Fintechs should develop artificial intelligence tools and techniques to monitor and control inflation and hedge against it. • Central Bank Digital currencies: Central banks in Arab countries should collaborate to develop a solid central bank digital currency that can help in maintaining stable inflation rates. REFERENCES Investopedia, Wikipedia, Business Insider, New York Times, www.toppr.com, Forbes, PEW Re- search, OECD data, The Economist the BANKING EXECUTIVE 44 ISSUE 163 JULY 2022