The Commonwealth Central Bank Governors have met at the ongoing World Bank annual meetings in Washington D.C., United States.
The chiefs discussed strategies to tackle inflation as the global economy faces excessive inflationary pressures driven by geopolitical tensions and disruption in the supply chain.
The discussion centred around high global inflation and the cost-of-living crisis which is affecting the lives of millions across the Commonwealth and beyond.
Chaired by Abdur Rouf Talukder, the parley on the theme ‘Tackling Inflationary Pressures on Multiple Fronts’, was the first in-person since 2019.
Talukder, Governor of Bangladesh Bank, informed his colleagues that Commonwealth nations have a crucial role in tackling inflation.
He said clear communication and close collaboration between monetary and fiscal policy authorities remain vital to tackle inflation from both monetary and fiscal fronts.
Noting that central banks have been quick to act by raising interest rates from January to date, Talukder highlighted the associated costs that can arise from tightening monetary policies.
“These include, but are not limited to unemployment, slow economic growth or even recession. Therefore, we need to tread cautiously to minimize the costs of monetary tightening as best we can”, he advised.
The meeting deliberated monetary policy tools to tackle inflation, the impact of rising interest rates on capital flows, and a presentation from the Reserve Bank of India on the Unified Payment Interface (UPI).
The Governors also shared their respective experiences and acknowledged an urgent need to manage inflation expectations.
They opined that inflation has been largely driven by the supply side as opposed to the demand side, thus posing a challenge for central banks.
In many Commonwealth countries, inflation, which has reached record-high levels, has been driven by rising import prices of fuel and food prices.
However, exchange rate appreciation in some nations has reduced the inflationary pressures caused by global supply shocks and geopolitical tensions, leaving room to keep monetary policy relaxed.