Global central banks told not to panic in face of inflation spike

OECD said price gains will peak at the turn of the year as demand stabilizes, supply bottlenecks fade and people return to the labor force

Central bankers should hold their nerve as they watch the global economic recovery slowing, imbalances persisting, and a stronger and longer-than-expected inflation surge cast a shadow over the outlook, the OECD said.

In its report on the world economy, the Paris-based organization said price gains will peak at the turn of the year as demand stabilizes, supply bottlenecks fade and people return to the labor force. The situation presents “considerable policy challenges” for monetary officials who should stand ready to intervene, but not move precipitously to rein in inflation.

“In current circumstances, the best thing central banks can do is to wait