During the meeting, the bank warned about the risk of entering a stage of high inflation from a combination of persistent disruptions from the pandemic, the war in Ukraine, rising commodity prices, and financial weaknesses.
Before this panorama “the key for central banks is to act quickly and decisively before inflation takes holde”, said Carstens, as part of the agency’s annual report.
“If it does, the costs of bringing it back under control will be higher. The long-term benefits of preserving stability for households and businesses outweigh any short-term costs,” she added.
Along these lines, they warned: “The risk of stagflation hangs over the global economy, since the threat of a new era of inflation coincides with a weaker growth outlook and elevated financial vulnerabilities”.
“Policymakers must press ahead with reforms to support long-term growth and lay the groundwork for more normal fiscal and monetary policy environments”, they completed.
Source: Ambito
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