Economic leaders discussed inflation and recovery

Central bank leaders discussed ways to get the global economy back on track. He says the recovery will depend on countries’ ability to manage the coronavirus. They also say that we should control inflation.

The World Economic Forum hosted bankers and others in an online conference. They usually meet with business and political leaders in Davos, Switzerland, but virus concerns have forced them to postpone.

They agreed that governments could help end the pandemic by improving vaccination rates in their own countries. International Monetary Fund director Kristalina Georgieva said central bankers should take a similar approach to economic recovery.

He said that policies should be country-specific. However, he acknowledged that such an approach would further complicate his work in 2022.

Georgieva said that the US Federal Reserve is taking the right approach by raising interest rates. However, he said it could hurt recovery in highly indebted countries.

European Central Bank President Christine Lagarde said the EU economy is recovering. However, this causes prices to skyrocket. He said the inflation rate in December was 5%, the highest in years.

Lagarde said he expected some recovery, but little did he know the recovery would be as strong and quick as it was before.

Still he is optimistic. She thinks that prices will stabilize, as will supply chain bottlenecks.

Central Bank of Japan chief Kuroda Haruhiko said his country had the opposite concern: inflation too low.

Unlike the United States or Europe, Japan should continue its extremely loose and liberal monetary policy for the time being, he added.

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Kuroda said the recovery was delayed because of a “cautious mindset”. He said that he is determined to bring the economy to 2% inflation at the earliest.

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