Liquidity boom driving up food prices: Robert Zoellick
04 Dec 2009
Investors are using the low-interest rate regime to pump surplus funds into the commodity markets in search of higher returns, thereby pushing up food prices as well, World Bank president Robert Zoellick said today.
Excess liquidity in global markets is driving up prices of farm goods, precious metals and oil, Zoellick said, adding, this could create other dangerous asset bubbles in near term.
"I am somewhat concerned with a lot of liquidity in global markets," Zoellick said at a news conference. "You could see additional moves towards the agricultural commodities sector, if there were perceptions of market shortages," he added.
With stock markets offering no big gains, speculators have turned to commodity markets, sending food and crude oil prices to record highs, putting even more pressure on the poor, Zoellick said.
Prices of essential commodities like rice, corn and wheat have been continuously rising and have touched record levels in several countries.
Investors in commodities have resorted to hoarding of food, speculating on increase in prices and these have been blamed for food scares and riots in many developing countries.
