BIS’s Borio: natural rate puts central banks in ‘straitjacket’

Central banks may be placing too much faith in the natural rate of interest as a guide to policy-making, the Bank for International Settlements’ Claudio Borio said on September 30.

Borio, who heads the BIS’s monetary and economic department, said for monetary policy to be able to normalise, central banks need to solve both an economic issue and an intellectual one.

The economic issue is better understood, he told a conference hosted by the European Central Bank. The Phillips curve has become