The top representatives of the world’s central banks and finance ministers gathered near Dragon Rock, Germany, this Thursday (19), have their own beast to destroy: stagflation.
Financial leaders in the Group of Seven assemble as the war in Ukraine raises the cost of raw materials, while new pandemic-related restrictions in China have slowed global trade, raising the specter of a sustained period of high inflation and stagnation. economic.
“We will have to discuss what we can do together in our respective areas of responsibility to avoid stagflation scenarios,” German Finance Minister Christian Lindner told reporters as the leaders arrived for the two-day meeting.
The palatial hotel in Koenignswinter, where the event is held, overlooks Drachenfels, or Dragon Rock, where the hero of medieval Nibelung legend Siegfried supposedly slew a dragon that lived in a mountain cave.
As lethal and intractable as a mythological monster, stagflation has no easy solution: stimulate the economy and prices will spiral out of control even faster, turn off the money faucets and you will stifle economic growth.
After underestimating inflation for most of the past year, most central banks, from the United States to Europe to Australia, are now doggedly focused on containing prices that have been rising at the fastest pace in decades.
And finance ministers are worried that the economy will deteriorate further as sanctions against Russia make importing raw materials more expensive — straining household budgets as borrowing costs soar.
Source: CNN Brasil
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