Inflation is back near targets and that should be celebrated, central bank group BIS say
The recent surge in consumer prices should be celebrated, Claudio Borio, head of the economic and monetary department at the Bank for International Settlements, told CNBC.
His comments come after inflation readings have beaten expectations in both the U.S. and Europe over recent months — dividing policymakers and rattling financial markets on several occasions.
Inflation can be a tricky economic indicator: If it is too high, it erases the purchasing power of consumers; if it is too low, it can reduce economic growth. Inflation can also be bad for stock markets as it often leads to higher interest rates, meaning big firms have to pay more to service their debts which can then erode their earnings.
“The real problem is if inflation proves to be higher, uncomfortably higher for uncomfortably long,” Borio said.
However he stressed that the BIS — which is known as the central bank of central banks — expects the increase in inflation to be “transitory.”
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