ContextLecture on monetary and fiscal policy as inflation and financial stress appear together; the BIS serves central banks worldwide and calls for policies that preserve trust.
Why it mattersCarstens warns that deficits and debt test the limits of stabilisation policy.
Problems raised
High inflation and financial stress have appeared together.
Large deficits and debt test the limits of policy.
Tensions between monetary and fiscal policies are growing.
Solutions proposed
Acknowledge the limits of stabilisation policies.
Rebuild room for policy manoeuvre.
Keep monetary and fiscal policy as anchors of trust.
