no stagflation Also, economies are less energy-intensive now. BIS estimated that the amount of energy consumed relative to GDP has fallen by around 40% since the late 1970s. And finally, central banks are better equipped to respond to crises than in the 1970s, which saw the collapse of the Bretton Woods monetary system.
For these reasons, BIS said a repeat of that decade's stagflation is unlikely. But high commodity prices will still be disruptive, and central banks risk losing credibility if they allow inflation to stay high for too long, BIS added.
"This puts a premium on restoring low inflation quickly, before it becomes ingrained in households and corporate decisions," the report concluded.
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