Central banks ‘could face political pressure to allow high inflation’

Covid-19 debts could lead to government demands for low interest rates, says global bank

Soaring debt levels caused by the Covid-19 crisis could lead to governments putting pressure on central banks to tolerate higher inflation by holding down interest rates, the Bank for International Settlements has warned.

The BIS, an international body representing central banks that promotes monetary and financial stability, said there was a risk of a fundamental change" in attitudes to inflation and a return to the approach to running the economy taken after the second world war.