Reduction of central bank liquidity should be done delicately: BIS

London

CENTRAL banks are in a dilemma. Economies are at last expanding and inflation is beginning to accelerate, following years of slack growth. The question is, how do central banks counter inflation under present circumstances? How do they withdraw excessive monetary liquidity and raise interest rates without causing a slide in global bond, equity and property markets?

In its latest annual report, the Bank of International Settlements (BIS), the central banks' central bank, discusses the difficu…