International Clearance Bank: Global stagflation risk is imminent

21st Century Business Herald reporter Hu Tianzheng Comprehensive Report

According to the "2022 Economy" flagship report released on June 26, local time, the global economy is approaching a new era of high inflation. "At the same time, the threats of the new inflation era have weakened the prospects of economic growth and the fragility of financial aggressive occurs at the same time, and the risk of stagflation is imminent."

"This transition to the high inflation environment rarely occurs, but it is difficult to reverse." BIS suggested that central banks of various countries need to take action in time to restore low and stable inflation. When doing this, you should seek economic activities. The blow to the minimum, thereby ensuring financial stability. "It is difficult to design such a" soft landing "in history. The current conditions make it challenging."

It pointed out that there was a narrow road in front. In the scene where the economic tension is successfully resolved, due to the relief of the bottleneck of the supply chain and the reversal of the rise in commodity prices, the inflation pressure will spontaneously relieve, thereby reducing the scale of the required monetary policy tightening and alleviating the relevant economy The speed of the activity slows down. This situation is also called soft landing.

However, BIS said that the result may not be so good. The worst situation is stubborn inflation pressure to promote stronger currency tightening, which may cause "stagnation and hard landing" situation: greater economic growth slows down, even economic recession And financial pressure.

BIS believes that the global economy may be reaching a critical point, exceeding this critical point, and the inflation psychology will spread and ingrains.

"This will mean a major paradigm change." Its supplements, low inflation and high inflation mechanisms are completely different. When inflation is stable at a lower level, it mainly reflects the changes in specific industries or relative prices, not more synchronized synchronized synchronization. The price change. In addition, it also shows the characteristics of self -balance, which often only has a temporary impact on inflation. "And the high inflation system is a mirror image of the low inflation system, especially, they do not show the characteristics of self -balance, the price changes are more synchronized, inflation is more like the focus of economic subject behavior, which has a significant impact on it."

BIS analysis shows that in high inflation environment, the impact of price changes in individual products such as food or natural gas on overall inflation is often larger and longer than when inflation is lower. During the transition from the low inflation system to the high inflation system, inflation pressure often strengthens itself because a single price change begins to have a greater impact on people's behavior.

"The most important challenge in the near future is to prevent the global economy from shifting from a low inflation system to a high inflation system." The report said that in the process, policy makers need to limit economic costs as much as possible and maintain financial stability. However, some pain are inevitable. Historical experience shows again and again that the long -term cost of allowing inflation to be deeply ingrained far exceeds the short -term cost of controlling inflation.

"The key to the central bank is to take action quickly and decisively before the inflation becomes deeply ingrained." Said BIS President Agustín Carsers say that if the above situation occurs, the cost of re -controlling inflation will be higher, and the long -term benefits of maintaining stable families and enterprises will exceed more than more than more than more than more than more than the family and enterprises. Any short -term cost.

At present, the inflation of the United States, the euro zone, and the United Kingdom has been at a high point over decades. In May 2022, the US CPI was 8.6%, the euro zone was 8.1%, and the UK was 9.1%.

One year ago, in May 2021, the annual consumer price (CPI) of the euro area increased by 2%to 2.1%in the UK. The United States is 5%.

The major central banks around the world have begun to raise interest rates quickly to deal with inflation. The Federal Reserve and the Bank of the United Kingdom raised interest rates and 25 basis points and 25 basis points in June. The European Central Bank has made it clear that 25 basis points will be raised in July.

Even if the economy is likely to slide into the "stagflation" trap, the report shows that due to the improvement of monetary policy and macro -prudential framework, and decreased dependence on energy, the stagnation of the 1970s is unlikely to repeat itself. In addition, it turns out that in most of the 2021, economic growth is tough.

However, it still warns that the current financial fragile background, high debt and overestimated asset prices -may enlarge any slowdown.

The elasticity of the financial system will be tested. BIS said that although the current financial situation and capital status of the banking industry are much better than before, banks are now more indirectly open, and more importantly, macroeconomic prospects are the main sources of risks.

BIS's programming simulation indicates that the potential credit loss of the banking industry may be major. According to historical data, according to the market implied interest rate path, bank credit losses will be roughly consistent with the historical average of developed economies (AES). In addition, they will rise sharply when interest rates rising.

The report said that the vulnerability of the non -bank financial intermediary industry (NBFI) is more obvious, and it represents the potential and opaque risk exposure for banks. "The turbulence of the financial market in March 2020 highlights this, and structural vulnerability such as hidden leverage and liquidity mismatch is highlighted in the asset management industry. Therefore, other regulatory agencies such as central banks urgently need to double regulatory efforts in this field ","

In the middle and long term, BIS pointed out that policy makers must promote reform to support long -term growth and lay the foundation for more normal fiscal and monetary policy.

- END -