By Craig Stirling and Alexander Weber
Global inflation may reflect a “paradigm shift” where central banks can’t adequately respond by just focusing on national economies, according to the head of the Bank for International Settlements.
Agustin Carstens, sitting in the audience at a Riksbank symposium in Stockholm celebrating former Governor Stefan Ingves, addressed the panel at the end of a discussion that frequently touched on the risk that monetary officials’ views converge too far.
___STEADY_PAYWALL___“There is a lot of talk about groupthink and group reaction, but I think many of those comments come from putting aside something that I think is really huge: this is the fact that probably we’re facing the first episode of a global inflation,” he said. “This might be a little bit of a paradigm shift.”
Carstens, the former Mexican central-bank chief who now leads the Basel-based institution, cited the difference with the 1970s, when far fewer economies experienced inflation exceeding 5% than is now the case. He said that the world is now reeling from “two huge unprecedented shocks.”
“At some point we might have to start thinking about how to deal with global inflation, because I mean yes, what every economy is doing will have a very important impact, but there are global forces related to globalization, to capital flows, and even with events that are happening that are still going on,” he said.
With the panel discussion at an end after comments from participants including European Central Bank Governing Council members Klaas Knot and Pablo Hernandez de Cos, former Bank of England policy maker Kristin Forbes offered the sole response.
“It’s too soon to say global shocks mean global inflation and a new regime,” she said, noting that core and wage inflation measures aren’t moving in as synchronized a way as headline gauges of consumer prices. “Actions of central banks can break the link of high global inflation one year to what comes next.”
With assistance from Love Liman, Niclas Rolander, Ott Ummelas and Kati Pohjanpalo.
© 2023 Bloomberg L.P.
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