Cut public spending or raise taxes to help fight inflation,
Mar 12, 2024 3:56:24 GMT
Post by account_disabled on Mar 12, 2024 3:56:24 GMT
Governments around the world should raise taxes or reduce public spending to help central banks control inflation and mitigate the risk of a financial crisis, the Bank for International Settlements said. The bank of central bankers, which often operates as an informal mouthpiece for institutions, said governments were “testing the limits of what could be called the region of stability” by leaving fiscal policy loose while inflation remains. high and interest rates rise rapidly. “[Fiscal] consolidation would provide critical support in the fight against inflation,” the BIS said in its annual report, published on Sunday. “It would also reduce the need for monetary policy to keep interest rates higher for longer, thereby reducing the risk of financial instability.
Traditionally, there has been a separation between fiscal policy, set by governments, and monetary policy, set by central banks and aimed at controlling inflation, taking into account the levels of public spending and taxation. Central bankers Russia Mobile Number List have insisted they are confident in their ability to separate monetary policy decisions from financial stability concerns, but the BIS's concern belies those assurances. The chances of a financial crisis are significant given that interest rates are high and continuing to rise, the BIS said. However, he added that these risks could be reduced if governments tightened fiscal policy, taking some pressure off interest rates as a primary policy tool and strengthening countries' public finances.
High interest rates have already caused serious financial turmoil over the past year, the BIS said, citing the UK pension fund and government bond crisis last October and the bankruptcy of US regional banks and Credit Suisse.this spring. Agustín Carstens, head of the BIS, said inflation was falling in most countries, but "the last mile is usually the most difficult." “The burden is falling on many shoulders, but the risks of not acting quickly will be greater in the long term. Central banks are committed to staying the course to restore price stability and protect people's purchasing power,” he said. The BIS warned that, in the longer term, governments and central banks should avoid trying to solve all of society's problems with economic stimulus. This echoed recent advice from the OECD.
Traditionally, there has been a separation between fiscal policy, set by governments, and monetary policy, set by central banks and aimed at controlling inflation, taking into account the levels of public spending and taxation. Central bankers Russia Mobile Number List have insisted they are confident in their ability to separate monetary policy decisions from financial stability concerns, but the BIS's concern belies those assurances. The chances of a financial crisis are significant given that interest rates are high and continuing to rise, the BIS said. However, he added that these risks could be reduced if governments tightened fiscal policy, taking some pressure off interest rates as a primary policy tool and strengthening countries' public finances.
High interest rates have already caused serious financial turmoil over the past year, the BIS said, citing the UK pension fund and government bond crisis last October and the bankruptcy of US regional banks and Credit Suisse.this spring. Agustín Carstens, head of the BIS, said inflation was falling in most countries, but "the last mile is usually the most difficult." “The burden is falling on many shoulders, but the risks of not acting quickly will be greater in the long term. Central banks are committed to staying the course to restore price stability and protect people's purchasing power,” he said. The BIS warned that, in the longer term, governments and central banks should avoid trying to solve all of society's problems with economic stimulus. This echoed recent advice from the OECD.