Tax warning from central banks' bank

The Bank for International Settlements (BIS), known as the central bankers’ bank, has called for reduced public spending and higher taxes to combat 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 for central banks, said governments were “testing the boundaries of what might be called a zone of stability” by loosening fiscal policy while inflation was high and interest rates were rising rapidly. “[Fiscal] consolidation would provide a critical boost to the fight against inflation. It would also reduce the need for monetary policy to keep interest rates high for longer, thereby reducing the risk of financial instability,” the BIS said in its annual report published on Sunday.