THE GUARDIAN: Bank of International Settlements warns that economies, such as in the UK, need policies to cool price growth
Governments must raise taxes or cut public spending after central banks kept interest rates too low for too long in the face of higher inflation, according to the Bank of International Settlements.
Closing the gap between government income and expenditure would “calm inflation”, according to the annual report from the Basel-based organisation, which advises 63 central banks covering 95% of global economic output.
Governments that embarked on spending cuts or tax rises would reduce business and consumer demand and be a critical part of the “last leg” in the battle to tame inflation, which despite an intense run of interest rate rises by central banks around the world is far from over, the institution warned in a press release alongside the annual report. This final drive would also be the “hardest” however, in the fight to cool the sharp rate of price growth.
Amid concerns that the UK economy is already heading into a recession after a succession of sharp interest rate rises, the BIS took a tough line, saying higher taxes and lower spending could “contain financial instability risks in several ways”. » | Anna Isaac | Sunday, June 25, 2023
