Central banks reflect on inflation fight as uncharted territory looms
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Central banks are analyzing what led to high inflation and how to avoid repeating mistakes. Key debates center on flexibility of inflation targets, effectiveness of quantitative easing, and monetary/fiscal policy coordination.
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Economists say central banks will allow more time to reach targets if it prevents economic damage. But retaining credibility means getting inflation back to 2% first.
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QE may be used more sparingly going forward due to market distortions and losses from rising rates. Unwinding balance sheets is uncharted territory.
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Fiscal stimulus during pandemic contributed to inflation. Now fiscal tightening risks countering monetary policy. Close coordination is needed.
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Structural policies, not just fiscal and monetary measures, are needed for sustainable growth. Mindset change required to reduce reliance on stimulus.