Policymakers need to abandon the illusion that they can use monetary and fiscal stimulus to engineer economic growth without stoking inflation or breeding financial instability, the head of the Bank for International Settlements has warned.
Agustín Carstens, general manager of the BIS, an umbrella body for central banks, called on Monday for governments and central banks to stop seeking quick fixes to boost the economy every time recessions hit or growth faltered, and instead embrace the need for deeper reforms.
“To generate resilient and sustainable growth, there is no alternative to working on the supply side of the economy. Structural reforms are politically difficult, we know. But we also know that there is no free lunch,” he said at an event at Columbia University in New York.