Governments advised to cut public spending or raise taxes to curb inflation

The Bank of England in London. UK inflation has remained stubbornly high despite a number of interest rate rises. Photograph: Pietro Recchia/Sopa Images/Shutterstock

Governments must raise taxes or cut public spending after central banks kept interest rates too low for too long in the face of higher inflation, according to the Bank of International Settlements.

Closing the gap between government income and expenditure would “calm inflation”, according to the annual report from the Basel-based organisation, which advises 63 central banks covering 95% of global economic output.