BIS head Agustin Carstens has warned that interest rates may need to stay high because of persistent inflation, fuelled by excessive pandemic-era stimulus.
Interest rates may need to stay higher for longer because of persistent inflation fuelled by excessive pandemic-era stimulus that went on for too long, one of the world’s top central bankers has warned.
While headline inflation globally has fallen from the peaks of last year, Mr Carstens warned that the “easy gains” from lower commodity prices and the restoration of normal order in global supply chains were over. “Staying clearly within this region prevents them from damaging the economy through inflation, financial stress and slumps,” Mr Carstens said.showing Australian pandemic-era stimulus measures such as JobKeeper dramatically overcompensated for lost income.
Combined with rock-bottom interest rates, excessive stimulus pushed inflation 3 percentage points higher than it needed to be, Mr Murphy found.by researchers from the Federal Reserve Bank of San Francisco, who found Australia was one of just five OECD countries to provide too much fiscal stimulus.
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