The Bank for International Settlements (BIS), known as the bank of central banks, called for reducing public expenditures and increasing taxes as part of the fight against inflation.
The Bank for International Settlements said governments around the world should raise taxes or cut public spending to help central banks rein in inflation and reduce the risk of a financial crisis.
The institution, known as the bank of central banks, said that as inflation remains high and interest rates soar, governments are “testing the limits of what can be called a stability zone” by loosening fiscal policy.
“[Fiscal] consolidation will provide a critical boost in the fight against inflation. It will also reduce the need for monetary policy to keep interest rates higher for longer, thereby reducing the risk of financial instability,” the BIS said in its annual report released Sunday.