We began publishing this rate on April 3 of this year, along with two other repo rates: the Tri-Party General Collateral Rate and the Broad General Collateral Rate. 18 This work complements steps by the Federal Reserve to promote greater transparency in rates in unsecured markets through enhancements to the calculation of the effective federal funds rate (EFFR) and the launching of an entirely new rate, the overnight bank funding rate (OBFR).19 I have long been a proponent of the idea that central banks are well suited to take on this responsibility. Reference rates have strong public good properties, and the private sector faces notable coordination challenges in this area. Central banks have a long history in producing such measures—recognizing that traditionally this has been for purposes related to monetary policy— 3/6  BIS central bankers' speeches  and are trusted independent parties. In my view, central banks also ultimately “own” the financial stability risks that are present when key reference rates are flawed. Better to recognize this responsibility and move proactively to mitigate such risks than to step aside and hope that someone else will take up the mantle of reform. The Federal Reserve has designed these benchmarks to be compliant with IOSCO principles, with regular review by oversight bodies and comprehensive ethics and conflict-of-interest policies for staff.20 Best practice also dictates that administrators periodically review the rates they produce to assess whether changes in the underlying markets require changes in how those rates are administered.
The background data for the May Business Perceptions Report also points to less dynamic employment in the months ahead, in line with business expectations as reported in the IMCE. This is consistent with declining real wages amid rising inflation. In any case, the unemployment rate remains below its historical averages, standing at 7.7% in the February-April quarter (figure 5). On the external front, global inflation has risen significantly in recent months, with core inflation accelerating in several economies. In the United States, in addition to high goods inflation, there has been higher records in services and volatile components of the basket, amid a still tight labor market and high house prices. In the Eurozone, while energy remains the main factor behind price increases, food inflation and core measures have accelerated lately. In the United Kingdom, in addition to higher goods and energy inflation, services have become more prevalent, amid upward wage pressures. In Latin America, energy and food prices have continued to drive inflation, which has also passed through to higher prices for some services (figure 6). The rise in inflation has occurred in a scenario of high cost pressures around the world. The continuing impact of the pandemic on global supply chains and commodity prices has been compounded by the effects of Russia's invasion of Ukraine and recent confinements in China. Producer price indexes have risen to unprecedented levels and across countries in the last year, reflecting the higher costs of commodities and intermediate inputs.