World may be on brink of new inflationary era, says central bank chief

Agustín Carstens said higher borrowing costs could be required for several years to curb spiralling prices. Photograph: Edgard Garrido/Reuters

The world economy may be on the brink of a new inflationary era with persistently higher growth in consumer prices due to the retreat of globalisation, a leading central bank chief has said.

Agustín Carstens, head of the Basel-based Bank for International Settlements – which is known as the central bank of central banks – said there was a strong risk that prices would rise uncontrollably without a sharp rise in interest rates above existing plans.