Almost 60% of advanced economies now have year-on-year inflation above 5% (Getty)
The world is facing a new era of high inflation Andinterest rates Meanwhile, deteriorating ties between the West, Russia and China and the repercussions of the COVID-19 pandemic are pushing globalization back, according to a warning from the head of the Bank for International Settlements.
It means a sharp rise in global energy prices Food is that nearly 60% of advanced economies now have year-on-year inflation above 5%, the highest rate since the late 1980s, while it is above 7% in more than half of the developing world.
Augustin Carstens, Group General Manager, said: Bank for International Settlementsthe umbrella of the world’s central banks, today, Tuesday, “It is a key message that we may be on the cusp of a new inflationary era.”
“We need to be open to the possibility that the inflationary environment is fundamentally changing… If my thesis is correct, central banks will need to adjust their policy,” he added.
Carstens cited forecasts by economists now pointing to inflation above 4.5 percent in the United States and most of Europe over the next two years and above 3.5 percent in many other advanced economies.
“Most likely, this will require real interest rates to rise above neutral levels for some time in order to slow down the pace of demand,” he said.
Carstens urged governments to resist the temptation to try to offset the brunt of inflation or higher interest rates, saying, “The key to higher sustainable growth cannot be expansionary monetary or fiscal policy,” adding that “many of the economic challenges we face today stem from ignoring policies on the one hand.” exhibited over the past ten years or more.
(Archyde.com)