Russia-Ukraine war heightens central bank challenges — BIS

BIS main building in Basel, Switzerland. (Photo: Wikipedia)
ZURICH, Switzerland — The Russia-Ukraine conflict has exacerbated the problems central banks face as soaring energy costs fuel high inflation, a top official of the Bank of International Settlements said on Monday.اضافة اعلان

The war “has greatly heightened economic uncertainty” and its evolution “will be by far the dominant factor influencing markets”, said Claudio Borio, head of the monetary and economic department at the BIS, dubbed the central bank for central banks.

“Against this backdrop central banks’ challenges have become more complex as inflationary pressures have risen even as the outlook for growth has softened,” he added.

Energy prices have rocketed over the geopolitical tensions in eastern Europe as fears grow of supplies from Russia dwindling or being cut off altogether.

Brent crude oil topped $100 per barrel — levels not seen since 2014 — and Europe’s reference Dutch TTF natural gas price surged more than a third in Monday trading.

Soaring inflation had already posed problems for central banks over whether to hike interest rates and how far to go as economies reopened following pandemic restrictions.

The BIS did not comment on international sanctions imposed against Russia over Moscow’s invasion of Ukraine.

The Switzerland-based institution acts as a neutral space where central bankers can meet and discuss monetary policy issues.

But spokeswoman Jill Forden said the BIS would follow sanctions and not be an avenue for sanctions “to be circumvented”.

Earlier, a senior policymaker at the European Central Bank said the guardian of the euro should take a cautious response to the economic uncertainty caused by the Russian invasion of Ukraine, as the conflict threatens to increase inflation and choke growth in the eurozone.

“This terrible event has made the

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