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‘Interest rates must be raised quickly and resolutely’

June 26, 2022

18:09

The Bank for International Settlements, an umbrella organization of central banks, is calling for swift action to curb inflation before it gets even more problematic.

The Swiss Bank for International Settlements (BIS), a cooperative body of central banks, recently held its general meeting. Central bankers looked at the current situation with sharply rising prices of many commodities and products and turbulent financial markets.

In an accompanying press release, which is perhaps slightly more current than the actual annual report, Carstens puts it more sharply. “It is crucial for central banks to act quickly and decisively before inflation becomes entrenched.” He fears that the costs of bringing inflation back under control will be higher if inflation changes the behavior of households and businesses.

The US Federal Reserve and Bank of England have already raised interest rates several times. Interest rates also rose in Northern and Central Europe. The ECV held off the boat, but can possible in july raise interest rates.

But making a soft landing with the economy is not easy, history shows. The current high debt and overvalued asset prices complicate this even more. But Carstens believes that ‘The longer-term benefits of maintaining stability for families and businesses outweigh any short-term costs.’

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