Noted economist Pedro Silverio says in today?s El Caribe that for the first time in 15 years we are looking at double-digit inflation rates. The combined total for January and February was 21.52%, which is 50% more than was projected in the IMF agreement. This is not good news for consumers or for the business community, and even worse for a government that is nearing the end of an electoral term, when inflation becomes an additional determining factor in its unpopularity, potentially dimming already slim hopes of victory. Inflationary effects are devastating from any point of view, according to Silverio. From a social stance, the poor get poorer and threaten the ability to govern effectively. From an economic viewpoint, inflation creates uneasiness about the future and has a negative effect on the assignation of resources. The head of the CENANTILLAS economic think-tank said that the inflation is being fed from different sources, among them the expansion of credit by the Central Bank. The expectations in the mindset of the principal economic players is another factor, since they are giving the government low grades in terms of their economic policies? credibility. The new electric rates, which seem inoffensive at 3% and 8%, is really a large increase because they are tied into the elimination of the subsidy that was being applied to the first 200kWh consumed. At the same time, the adjustments in the price of fuel unleash their own chain of inflationary elements. Because of this, inflation can bee seen as a continual process of adjustments in prices until the primary causes disappear. Silverio ends by saying that our problem is that the causes have not disappeared because the Central Bank is forced to emit un-backed currency in order to pay the interest on the certificates of deposit, the interest on inter-bank (overnight) deposits and to pay the certificates on their due dates. For most economists, inflation, in the long run, is seen as a monetary phenomenon that requires monetary controls. Silverio says that this is something the monetary authorities have not managed to do, and will probably not be able to do before their term ends on 16 August 2004.