How can central banks curb high inflation?
Around the world central bank their presidents are in economic difficulties that they have not faced for decades. It will become more difficult for them to curb high inflation in the new economic era.
The newspaper “The Financial Times” writes that high-ranking officials and monetary politicians issued such a warning.
Last weekend USAof the Federal Reserve System, Europe The Central Bank (ECB) and other central banks met in Jackson Hole, Wyoming. Speakers at the annual meeting said that the global economy has entered a new, tougher era.
Deputy Managing Director of the International Monetary Fund Gita Gopinas told the newspaper that monetary policy for at least the next five years until the pandemic 20 it will be more difficult than last year. He noted that shocks in the supply chain are more volatile.
As if the price increase caused by the Covid-19 lockdowns in the supply chain was lost, Russia’s full-scale attack on Ukraine also spoke volumes.
As if the price increase caused by the Covid-19 lockdowns in the supply chain was lost, Russia’s full-scale attack on Ukraine also spoke volumes.
As a result, central banks tightened monetary policy to prevent inflation from penetrating deeper into the global economy.
But the president of the World Bank David Malpass warned that the tools of central banks, especially in developed economies, are supply-side inflation not well adapted to the solution of pressures. According to him, raising interest rates has to compete with obstacles in the economy.
“Problems in the supply chain and the production cycle prevent increased discount rates to reduce inflation,” – he said.
Newspaper writes that the leading figures of the Fed and the ECB have made “unconditional” promises to restore price stability. Fed Chairman Jay Powell warned that the result would be a period of “sustained” slow growth and labour market is expected to weaken.
Malpass stressed that global financial conditions put developing countries in a weaker position.
Head of the Bank of Korea Changyong Ri to work central bank summed up the enormity of the problem facing its leaders by saying that the world’s return to a low-inflation environment “billion dollar question.
Newspaper 2 percent that advanced economies have followed for decades at the conference inflation writes that the goal is the agenda. Economists say the target should be adapted to a fragmented global economy, many of which are 3 percent inflation they talked about their goal.
Former Fed employee, now working at the Brookings Institution Stephanie Aaronson said that the new target will help central banks to support the economy more flexibly during crises.