The Bank for International Settlements has published remarks from a panel on monetary policy in a fragmented global economy, held at its annual conference in Basel on June 26, 2026. The discussion examined how more frequent supply shocks complicate inflation control, emphasizing the need to anchor household and business expectations, improve communication and adapt policy analysis. The remarks also highlighted that appropriate policy responses depend on how shocks affect individual economies. Reserve Bank of New Zealand Governor Anna Breman argued that public communication can help anchor expectations by improving trust and understanding, although evidence of its direct effect on expectations is mixed. Communication cannot replace monetary tightening when needed, and misinformation risks weakening policy transmission. Central Bank of the Republic of Türkiye Governor Fatih Karahan presented research showing that delivery matters: video messages outperformed text alone in influencing expectations and confidence. In a separate study of direct engagement with businesses, participating firms lowered consumer price inflation expectations by roughly 1 percentage point and producer price expectations by 1.2 percentage points relative to firms without direct contact. Bank of Canada Governor Tiff Macklem discussed adapting models, scenario analysis and economic intelligence to distinguish temporary supply disruptions from persistent inflation pressures. He also called for better data, stress tests and international cooperation to identify risks in nonbank finance and international capital flows. Central Bank of Norway Governor Ida Wolden Bache emphasized that large shocks or prolonged inflation overshoots may warrant stronger policy responses, while adverse supply shocks require balancing inflation control against employment and activity. Energy shocks illustrate why national circumstances matter: higher oil prices can support Norwegian petroleum investment and incomes, potentially strengthening the case for tightening to prevent subsequent inflation effects.
Bank for International Settlements publishes panel assessment of monetary policy and inflation risks in a fragmented global economy
The Bank for International Settlements has published remarks from its June 26, 2026, conference panel examining monetary policy in a fragmented global economy. Speakers emphasized anchoring household and business inflation expectations through effective communication and improving models and economic intelligence to assess supply shocks. They also highlighted that policy responses must reflect national circumstances and called for better data and international cooperation to identify financial stability risks.