Monetary policy made a decisive contribution to stabilizing the economy during the pandemic.
It is right if the central banks continue to agree to support measures.
At the same time, however, they are also responsible for creating confidence in price stability.
With the unchecked continuation of the billion dollar bond purchases, this goal cannot be achieved in the long run.
The Bank for International Settlements, which is the bank of the central banks, rightly points in its annual report to the difficult tightrope walk that central banks are facing in view of the recent higher inflation rates. There is some evidence that inflation is temporary. But this cannot be said with certainty at this point in time. It would therefore be good if discussions were held in the European Central Bank and the American Federal Reserve as to when and how monetary policy can be normalized again.
Ultimately, the financial markets have to adjust to this scenario. Because monetary policy no longer has much leeway if it misses the timely exit from the extraordinary measures and a recession occurs in the medium term. It would also be in the interests of financial stability to re-sharpen investors' risk awareness by discussing a return to normalcy.