The annual report of the Bank for International Settlements (BIS) was released on Sunday.
It makes for grim reading.
- “At a minimum, a spell of below-trend growth will be required to return inflation to acceptable levels. But a modest slowdown may not be enough. Lowering inflation could involve significant output costs, as after the “Great Inflation” of the 1970s,”
- “In a worst-case scenario, the global economy could be set for a period of stagflation, involving both low growth, if not an outright recession, and high inflation.”
BIS general manager Agustín Carstens:
- current combination of high inflation & historically high debt levels was unprecedented
- “For too long, fiscal and monetary policy have been the go-to economic fix, resulting in debt-fuelled growth. These have now run out of road,”
- “As monetary policy tightens, tensions with fiscal policy will emerge. As monetary normalisation gathers pace, growth rates will probably be closer to or even below interest rates”
