The Bank of International Settlements’ annual report has warned that the global economy is under serious pressure.
According to the group’s general manager Malcolm Knight many central banks around the globe will need to curb inflation with interest rate rises.
Increased food and energy prices combined with the higher costs of funds are expected to lead a slowdown in global growth, which will require action from central banks – particularly in emerging markets.
“There is a clear and present danger of rising global inflation and inflationary expectations,” Mr Knight said.
While many forecasters believe recent rises in headline inflation in industrial countries represent a temporary glitch in world economic growth, Mr Knight cautioned that this may not be the case.
“We cannot be entirely confident about this reassuring assessment,” he said.
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