Source: Bank for International Settlements
While the global economy remains on track for a soft landing, the path ahead is not without risks. Real rates may remain higher than they were before the pandemic as central banks deal with a structurally more inflation-prone landscape. Fiscal policy may not be restrained enough to ensure financial stability. Productivity growth may remain sluggish in most advanced economies. Markets may be volatile, with potential spillovers to financial intermediaries. To guard against these risks and ensure resilience and stability, prudent monetary policy, fiscal consolidation and structural reforms are all necessary.