The Bank for International Settlements (BIS) has adjusted its strict approach to inflation, acknowledging recent improvements but emphasizing that challenges persist for central banks. Global economic data suggests a shift away from multi-decade inflation highs caused by the post-COVID-19 rebound and energy price spikes. Markets anticipate significant rate cuts by the U.S. Federal Reserve and European Central Bank in 2024.

While the BIS recognizes progress, it cautions that uncertainties persist, urging central banks to remain flexible and nimble in response to a potentially slowing global economy. The report highlights concerns about the unfolding credit risk following a significant rise in borrowing costs. The BIS also addresses specific issues, such as the buy-now-pay-later (BNPL) sector, which, though currently small, faces challenges in a less favorable economic environment.

The BIS emphasizes that the era of ultra-low interest rates has ended but notes ongoing debates about when interest rates will stabilize. Central banks commit to keeping rates elevated as long as necessary to combat inflation, with uncertainties about the duration of this strategy.

SOURCE:GOOGLE