BIS paper warns of worsening fiscal and monetary trade-offs

Many governments have sought to shield consumers from price rises, at a high budgetary cost

Bank for International Settlements, Basel
The Bank for International Settlements
Photo: BIS

The worldwide surge in inflation has worsened the trade-offs faced by fiscal and monetary policy-makers, analysis by the Bank for International Settlements finds.

Ana Aguilar, Carlos Cantú and Rafael Guerra note many governments have used fiscal policy to soften the blow to consumers from higher prices, particularly prices of food and energy. But this creates problematic interactions with monetary policy.

For central banks, especially in emerging market economies (EMEs), looser fiscal policy

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