Bank for International Settlements: Economic growth must be sacrificed in the fight against inflation
The central banks of countries around the world must sacrifice economic growth in the name of fighting inflation.
It called on the Bank for International Settlements (BIS) in its annual report.
In the document of the BIS is noted that the international financial crisis is far from complete, a common prescription for dealing with negative implications in each region will.
The threat of rapidly increasing prices is particularly timely and it should give priority attention monetary authorities believe the experts from BIS.
They argue that central banks have reacted in the most different crisis phenomenon and there is no common model for individual economic situation.
Experts warn of BIS colleagues from the central banks of the dangers that poses a possible reduction in the basic interest rate from many of the only way to rebuild a financial crisis.
In the future, such monetary policy could lead to negative effect when the weakening of credit conditions will increase inflation, which will only accelerate the decline of the global economy, which started in the U.S. and continues to circulate in other regions.
From the BIS stressed that recent events in the international financial arena are created enormous uncertainty about future economic prospects.
Thus, the European Central Bank (ECB), whose policy is to fight against inflation in the 15 - countries of the euro, reported that this week may increase the minimum basic rate of today’s 4% (as economists would like to see this indicator of Level 2%).
BIS said that raw lending standards will keep the common limited availability of credit.
By experts agree with the views of the BIS, that there is no single solution for all economies in the world, but they would not emitter as a priority today, the fight against inflation.
“Everything depends on each particular region. Fighting inflation is timely for Asia, but not suited for the U.S. and Britain for example, where the resolution of the problems with the property market is much more important,” said economist of the Organization for Economic Cooperation and Development David Turner.
Therefore, the Bank recommended in developed industrial economies to implement a strict monetary policy, while low U.S. interest rates will be more adequate solution to the crisis.
Regarding the euro, Turner would set the interests of the monetary authorities somewhere in the middle: for the majority of European economies is more appropriate balance between effective combat inflation pressures and preserve the system available for lending.
