BIS: Okay, loose monetary policy

Released on 20.09. 2021

  • According to a study by the Bank for International Settlements (BIS), the central banks can allow their monetary policy to be relaxed. Photo: Richard Drew

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Which measures are necessary for the central banks in view of the current inflation rate? The Bank for International Settlements (BIS) agrees with the current line.

Basel (dpa) – According to the Bank for International Settlements (BIS), the central banks can afford their loose monetary policy line despite the current sharp rise in inflation. This is the result of a study that the BIS published in Basel on Monday.

Much of the price change is concentrated in a few economic sectors in an environment with long-term low inflation, it said. This suggests that the recent sharp rise in inflation is a transitional phenomenon.

Not all experts agree

The bank of central banks As the BIS is also called, it supports the arguments of many large central banks. For example, the US Federal Reserve and the European Central Bank (ECB) do not consider the current rise in inflation to be sustainable and therefore want to keep their monetary policy relaxed. They argue with corona-related special conditions and statistical effects due to low comparative values ​​in the previous year. However, not all experts share this point of view.

In its study, the BIS assessed price developments in 131 Areas of the US economy studied over a long period of time. It is of the opinion that the results can in principle be transferred to other economies.

To illustrate its results, the BIS uses a comparison from music: Just like a credible conductor a well-rehearsed orchestra could afford to lead with minimal gestures, a credible central bank could afford to let inflation fluctuate within a larger range of its target without making vigorous adjustments.

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