Policy makers around the world already have increased interest rates to battle record inflation that comes at the same time as the fallout from Russia’s invasion of Ukraine and lockdowns in China weigh on global growth. Some 70 central banks have raised borrowing costs and half of them – including the US Federal Reserve – have resorted to massive hikes of 75 basis points or more in one go.
The world economy risks entering a new era of high inflation which central banks need to keep in check, the Bank for International Settlements said.
“The risk of stagflation looms over the global economy as the threat of a new inflation era coincides with a weaker outlook for growth and elevated financial vulnerabilities,” the BIS, which is commonly known as the “central bank for central banks,” said in its annual report on Sunday.
