Surveyed Central Bank Reserves Managers Say Inflation is Not ‘Transitory’, Likely to Remain High
Only 20% of surveyed central bank reserves managers still say that inflation will be “transitory,” as the US Federal Reserve (Fed) and other central banks insisted was the case until recently. Meanwhile, close to half of the managers say inflation is likely to remain elevated, per the latest edition of the OMFIF’s Global Public Investor report.
According to the Official Monetary and Financial Institutions Forum (OMFIF)’s report, even portfolio managers at central banks don’t stand behind central bank officials' message that inflation was “transitory.” At the same time, it appears to be an open question whether they ever actually believed in it.
Per the report,
“For the past year or so, monetary policy-makers have been trying to convince markets that the return of inflation is transitory. It’s not a line that their central bank counterparts in the reserves management divisions are buying any more, if they ever did.”
According to the survey results published in the report, more than 75% of central bank reserves managers say that inflation will either remain “sustainably higher” or be “more volatile,” with about 50% saying they believe inflation will remain at elevated levels.
Meanwhile, only 20% of the respondents said they think inflation will return to the level from 2010-2019 “relatively quickly.”
The OMFIF report commented on the finding by saying that,
The answers suggest that reserves managers “don’t believe their central banking peers in charge of monetary policy have the tools to suppress the surge in inflation any time soon.”
Expectations for inflation over the next 24 months among central bank reserves managers:
Meanwhile, close to 90% of the reserves managers count inflation as one of the three most important factors
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