BIS’s Carstens Says Central Banks Equipped to Combat Inflation

Global central banks have instruments to deal with rising inflation after rolling out unprecedented pandemic stimulus measures, Agustin Carstens, general manager of the Bank for International Settlements, said on Saturday.

  • “It is likely that we will see spiking inflation,” Carstens said on Saturday in a panel discussion during the China Development Forum organized by the Chinese government
  • This would require central banks, including the Federal Reserve, to revise monetary policies and give more weight to achieving the full-employment goal, he said
  • The Federal Reserve will be “extremely watchful” and inflation “will not be a destabilizing factor”: Carstens
  • The market needs to listen to the Fed, which has been consistent in saying that it doesn’t have enough information to change policy, he said
  • The way to smooth out the path to policy normalization is to ensure dialogue between the Fed and the market, Carstens said
  • Carstens doesn’t see major mispricing in markets
  • Lack of 100% clarity on bankruptcies over pandemic is a source of concern to him

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