{"id":1956406,"date":"2023-06-25T06:57:02","date_gmt":"2023-06-25T10:57:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bis-warns-world-economy-at-critical-juncture-in-inflation-fight\/"},"modified":"2023-06-25T07:01:24","modified_gmt":"2023-06-25T11:01:24","slug":"bis-warns-world-economy-at-critical-juncture-in-inflation-fight","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bis-warns-world-economy-at-critical-juncture-in-inflation-fight\/","title":{"rendered":"BIS warns global economy at crucial point in battle against inflation."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fbis-warns-world-economy-at-critical-juncture-in-inflation-fight%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1956406&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div class=\"entry-content\">\n<p>By Marc Jones<\/p>\n<p>LONDON (Reuters) \u2013 The world\u2019s central bank umbrella body, the Bank for International Settlements (BIS), called on Sunday for more <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/federal-reserve-chair-no-interest-rate-hikes-until-inflation-spike\/\" title=\"Federal Reserve Chair: No interest rate hikes until inflation spike\">interest rate hikes<\/a>, warning the world economy was now at a crucial point as countries struggle to rein in inflation. <\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\" style=\"min-width: 320px; min-height: 50px;  text-align: center;\">  \t<script>  \t\tgoogletag.cmd.push(function() { googletag.display('div-gpt-ad-1663871513696-art-1'); });  \t<\/script>  <\/div>\n<div class=\"ad-slot__ad-label\">Advertisement<\/div>\n<\/p>\n<p>Despite the relentless rise in rates over the last 18 months, inflation in many top economies remains stubbornly high, while the jump in borrowing costs triggered the most serious banking collapses since the financial crisis 15 years ago.<\/p>\n<p><strong>\u201cThe global economy is at a critical juncture. Stern challenges must be addressed,\u201d<\/strong> Agustin Carstens, BIS general manager, said in the organisation\u2019s annual report published on Sunday.<\/p>\n<p><strong>\u201cThe time to obsessively pursue short term growth is past. Monetary policy must now restore price stability. Fiscal policy must consolidate.\u201d<\/strong><\/p>\n<p>Claudio Borio, the head of BIS\u2019s monetary and economics unit, added there was a risk an \u201cinflationary psychology\u201d was now setting in, although the bigger-than-expected rate hikes in Britain and Norway last week showed central banks were pushing \u201cto get the job done\u201d in terms of tackling the problem.<\/p>\n<p>Their challenges are unique by post-World War Two standards though. It is the first time that, across much of the world, a surge in inflation has co-existed with widespread financial vulnerabilities.  <\/p>\n<p>The longer inflation remains elevated, the stronger and prolonged the required policy tightening, the BIS report said, warning that the possibility of further problems in the banking sector was now \u201cmaterial\u201d.<\/p>\n<p>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. <\/p>\n<p>\u201cI think central banks will get inflation under control. That is their job \u2013 to restore price stability,\u201d he told Reuters. \u201cThe question is what will the cost be.\u201d<\/p>\n<p>BANKING CRISES <\/p>\n<p>The Swiss-based BIS held its annual meeting in recent days, where top central bankers discussed the turbulent last few months.<\/p>\n<p>March and April saw a failure of a number of U.S. regional banks including Silicon Valley Bank and then the emergency rescue of Credit Suisse in the BIS\u2019s own backyard. <\/p>\n<p>Historically, about 15% of <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bis-warns-world-economy-at-critical-juncture-in-inflation-fight\/\" title=\"BIS warns global economy at crucial point in battle against inflation.\">rate hike cycles trigger severe stress<\/a> in the banking system, the BIS report showed, although the frequency rises considerably if interest rates are going up, inflation is surging or house prices have been rising sharply.<\/p>\n<p>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.<\/p>\n<p>\u201cVery high debt levels, a remarkable global inflation surge, and the strong pandemic-era increase in house prices check all these boxes,\u201d the BIS said.<\/p>\n<p>It estimated too that the cost of supporting aging populations will grow by approximately 4% and 5% of GDP in advanced (AEs) and emerging market economies (EMEs) respectively over the next 20 years. <\/p>\n<p>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.<\/p>\n<p>Part of the report published already last week also laid out a \u201cgame changing\u201d blueprint for an evolved financial system where <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fed-inches-closer-to-developing-central-bank-digital-currency\/\" title=\"Fed Inches Closer to Developing Central Bank Digital Currency\">central bank digital currencies<\/a> and tokenised banking assets speed up and smarten up transactions and global trade.<\/p>\n<p>Commenting further on the economic picture, Carstens, former head of Mexico\u2019s central bank, said the emphasis was now on policymakers to act.<\/p>\n<p>\u201cUnrealistic expectations that have emerged since the Great Financial Crisis and COVID-19 pandemic about the degree and persistence of monetary and fiscal support need to be corrected,\u201d he said.<\/p>\n<p>The BIS thinks an economic \u201csoft, or soft-ish\u201d landing \u2013 where rates rise without triggering recessions or major banking crashes \u2013 is still possible, but accepts it is a difficult situation.<\/p>\n<p>Analysts at Bank of America have calculated there have been a whopping 470 interest rate rises globally over the past 2 years compared with 1,202 cuts since the financial crash.<\/p>\n<p>The U.S. Federal Reserve has lifted its rates 500 basis points from near zero, the European Central Bank has hiked the euro zone\u2019s by 400 bps and many developing world economies have done far more.<\/p>\n<p>The question remains what more will be needed, especially with signs that companies are taking the opportunity to boost profits and workers are now demanding higher wages to prevent a further erosion of their living standards.<\/p>\n<p>\u201cThe easy gains have now been reaped and the last mile is going to be more difficult,\u201d Borio said, referring to challenges central bankers now face reeling inflation back to safe levels. \u201cI wouldn\u2019t be surprised if there were more surprises\u201d.<\/p>\n<\/p>\n<p>(This story has been corrected to change the combined rise ECB rate hikes to 400 basis points from 375 basis points in paragraph 22)<\/p>\n<\/p>\n<p> (Reporting by Marc Jones; Editing by Emelia Sihtole-Matarise)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/bis-warns-world-economy\/attachment\/file-photo-clubcard-branding-is-seen-inside-a-branch-of\/\"><\/a><\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>After India Prime Minister Narendra Modi and President Biden meet to strengthen ties, Barack Obama makes some very polarizing comments on the state of India during an interview on CNN<\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>This week has been filled with major headlines in the U.S. and around the world. One America\u2019s Rachel Acenas brings us more in our Week in Review.<\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>The massive search for a missing sub with five people on board comes to an end.<\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>More GOP candidates are entering the 2024 presidential election, with many speculating why now? One America\u2019s Monica Paige reports.<\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>TOKYO (Reuters) \u2013 Japan\u2019s military is testing Elon Musk\u2019s Starlink satellite internet service with an eye to adopting the technology next fiscal\u2026 <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>TOKYO (Reuters) \u2013 Japan\u2019s military is testing Elon Musk\u2019s Starlink satellite internet service with an eye to adopting the technology next fiscal\u2026 <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>By Indranil Sarkar and Chandini Monnappa BENGALURU (Reuters) \u2013 Fresh troubles at Indian edtech startup Byju\u2019s this week have escalated concerns among\u2026 <\/p>\n<\/p><\/div>\n<div class=\"entry-content\">\n<p>By Indranil Sarkar and Chandini Monnappa BENGALURU (Reuters) \u2013 Fresh troubles at Indian edtech startup Byju\u2019s this week have escalated concerns among\u2026 <\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>, the BIS urged for further interest rate hikes to combat inflation and stabilize the global economy. With countries grappling to control rising prices, the central bank umbrella body emphasized the critical juncture the world economy currently faces.<\/p>\n","protected":false},"author":66,"featured_media":1956407,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[542],"tags":[],"class_list":["post-1956406","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oann"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1956406","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1956406"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1956406\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/1956407"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1956406"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1956406"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1956406"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}