Inflation at risk from Covid-19

Key takeaways

• The pandemic has increased downside tail risks in advanced economies (AEs), while it has increased both downside and upside tail risks in emerging market economies (EMEs).
• The collapse in output and oil prices, on balance, increases downside inflation risks.
• Recent exchange rate depreciations increase upside risks to inflation in EMEs.
• Tighter financial conditions raise both downside and upside risks. In AEs, the increase in downside risks is more prominent.

Online appendix

The views expressed in this publication are those of the authors and not necessarily those of the BIS.