Fiscal policy must consolidate.'Ĭlaudio Borio, the head of BIS's monetary and economics unit, added there was a risk an 'inflationary psychology' was now setting in, although the bigger-than-expected rate hikes in Britain and Norway last week showed central banks were pushing 'to get the job done' in terms of tackling the problem.

Monetary policy must now restore price stability. 'The time to obsessively pursue short term growth is past. Stern challenges must be addressed,' Agustin Carstens, BIS general manager, said in the organisation's annual report published on Sunday.

'The global economy is at a critical juncture. LONDON, June 25 (Reuters) - The world's central bank umbrella body, the Bank for International Settlements (BIS), called on Sunday for more interest rate hikes, warning the world economy was now at a crucial point as countries struggle to rein in inflation.ĭespite the relentless rise in rates over the last 18 months, inflation in many top economies remains stubbornly high, while the jump in borrowing costs triggered the most serious banking collapses since the financial crisis 15 years ago.