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Central banks’ day of reckoning is here

By Jürgen Stark

3 min read

Editor's Note

As high inflation becomes the new normal, central banks must work to restore public trust, argues former ECB board member Juergen Stark in PS. They should start by abandoning their ivory tower.

TÜBINGEN – As energy prices continue to decline and the base effect of last year’s price increases takes hold, inflation rates across the Western world are expected to fall. Even so, prices will likely remain unacceptably high for the foreseeable future, making true price stability a distant prospect.

Moreover, rising wages and ongoing geopolitical tensions, together with long-term structural factors such as demographic trends and deglobalization, are expected to keep inflation expectations above central-bank targets, burdening Western economies and societies in the long run.

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