Stavrakeva: Central banks face a new inflation challenge

Speaking on Bloomberg Surveillance with Paul Sweeney and Tom Keene, London Business School's Dr Vania Stavrakeva argued that central banks are entering a new policy era as they seek to regain control of inflation amid slowing growth and fiscal pressures.

Dr Stavrakeva suggested that persistent inflation may require policymakers to rethink traditional approaches, with greater focus on managing money supply and deploying a broader range of monetary policy tools. She also highlighted the role of elevated asset prices, particularly equities, in supporting consumer demand and contributing to inflationary pressures.

Comparing the UK and US economies, she noted that the UK continues to face significant productivity challenges following the global financial crisis, alongside structural issues that have weighed on growth and innovation.

Looking ahead, Dr Stavrakeva said central banks may increasingly turn to new and unconventional policy instruments as they work to bring inflation closer to target while navigating an uncertain economic environment.

The full interview can be viewed here