“The more global interest rates rise, the greater the financial vulnerability in emerging and developing countries.”
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Berlin The World Bank has sharply criticized the monetary policy of the major central banks in the industrialized countries and warned of a wage-price spiral. “We can assume that wage demands will increase due to the tight labor market in the USA,” said World Bank chief economist Carmen Reinhart in an interview with the Handelsblatt. In addition, the central banks would probably only counter the price and wage increases very late – and then only slightly. That makes inflation more persistent.
Reinhart also contradicted ECB President Christine Lagarde’s assessment, who recently pointed out that Europe is not showing the same signs of economic overheating as the US. “The idea that you need overheating to get inflation is simply not proven,” Reinhart countered.
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