Carstens: "divine coincidence" of fixing more than one problem at once is fading as inflation risks climb.
Bank for International Settlements chief Agustin Carstens on Friday boosted his stark warning to central banks about a shift to a high inflation era, saying policymakers no longer have the luxury of chasing after goals other than slowing rapid price gains.
The global economy is likely moving into an era where production costs could be driven higher by fraying trade cooperation and a smaller share of the global population available for work, Carstens said in the released text of a speech at the Fed's Jackson Hole conference.
Reversing decades of progress around "geopolitics, globalisation and demographics" that kept inflation in check is something Carstens likened to a "coffin corner" where an airplane pilot risks stalling out and losing altitude. Earlier this year he made a similar but more speculative warning about a high inflation era.
"Central banks cannot hope to smooth out all economic air pockets, and must instead focus first and foremost on keeping inflation low and stable," Carstens said. "Even if the specific supply disruptions caused by the pandemic and the war fade, the importance of supply side factors for inflation is likely to remain high."