In some ways what the BIS is doing resembles Hegelian dialectics: by setting the parameters of conversation you can force the debate to your predetermined solution.
In other ways their pronouncements on inflation resembles that favorite tactic of politicians everywhere: Create a problem, implement a solution, increase your power.
And speaking of power, before we get into the inflation piece, here is BIS general manager Agustín Carstens summing up the purpose of Central Bank Digital Currencies in 56 seconds:
After that little appetizer here is FT Alphaville's Claire Jones with the main course, April 5:
Can rates get high on short supply without a crash?
Monetary policymakers’ frameworks are no longer fit for purpose and no-one seems to have any idea what to replace them with.
Here’s some happy reading for the world’s central bankers this evening. It comes courtesy of the Bank for International Settlements’ general manager Agustín Carstens, who says the fixes they’ve relied upon for the past few decades belong in the trash: (emphasis ours here and elsewhere)Central banks may also need to reassess how they respond to inflation resulting from supply side developments. These will typically spark relative price changes at first. The textbook prescription is to “look through” this type of inflation, because offsetting their impact on inflation would be costly. But that assumes inflation overshoots are temporary and not too large. Recent experience suggests it can be hard to make such clear-cut distinctions. What starts as temporary can become entrenched, as behaviour adapts if what starts that way goes far enough and lasts long enough. It’s hard to establish where that threshold lies, and we may find out only after it has been crossed....
....MUCH MORE including a soupçon of chart mania.
Note how, by defining the problem, he leads us to the Central Banker's preferred solutions, while not only failing to apologize for the Central Banker's role in getting us to this point but not even acknowledging the narrative failings of the last 24 months, the failure to call attention to what was going on in both the fiscal and monetary spheres.
This is some high-level CYA.
UPDATE: looking at the transcript of the General Manager's speech we see this acknowledgement on page 5 (of 14):
"But the strength of the recovery was not entirely due to the unique nature of the recession. The exceptional policy response played a key role. Early in the crisis, it helped firms and households withstand an unprecedented loss of income and forestalled serious financial disruptions. This paved the way for a rapid recovery. Over the past year, macroeconomic policy continued to support aggregate demand. In some countries, this involved continued fiscal stimulus, long after the worst of the recession had passed. And, almost everywhere, monetary policy fostered highly accommodative financial conditions, even in the face of strong growth and rising inflation. The initial policy response to the pandemic was meant to provide a bridge to the recovery. With the benefit of hindsight, policy settings, at least over the past year, may have served as a springboard for the rapid expansion."
