Inflation at risk from Covid-19

BIS Bulletin  |  No 28  | 
23 July 2020

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