The world's central bank umbrella body, the Bank for International Settlements (BIS), called on Sunday for more interest rate hikes, warning the world economy was now at a crucial point as countries struggle to rein in inflation.
last week showed central banks were pushing "to get the job done" in terms of tackling the problem.
If interest rates get to mid-1990s levels the overall debt service burden for top economies would, all else being equal, be the highest in history, Borio said. It can even be as high as 40% if the private debt-to-GDP ratio is in the top quartile of the historical distribution at the time of the first rate hike.
Absent belt-tightening by governments, that would push debt above 200% and 150% of GDP by 2050 in AEs and EMEs and could be even higher if economic growth rates wane.already last week also laid out a "game changing" blueprint for an evolved financial system where central bank digital currencies and tokenised banking assets speed up and smarten up transactions and global trade.
The BIS thinks an economic "soft, or soft-ish" landing - where rates rise without triggering recessions or major banking crashes - is still possible, but accepts it is a difficult situation.
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