The Bank for International Settlements (BAS) urged central banks not to "waste" the interest rate reserve built up in recent years and not to ease monetary policy too quickly, Reuters news agency reports.
The TAB, known as the main central bank, issued its recommendation after the European Central Bank cut interest rates for the second time this year last week and the US Fed is set to cut rates for the first time in four years on Wednesday.
Claudio Borio, Head of the Monetary Policy and Economic Department of the Bank for International Settlements (BAS), emphasized that the recommendation is intended for all central banks. He insisted that they must maintain a "margin of safety" to deal with expected problems and unexpected negative events.
"It would be a great pity if this space for maneuvers were wasted. A recession is expected and it will surely come. Contingencies are the shocks we experienced with COVID. This is an additional factor that must be taken into account when deciding on the pace and scope of actions," Claudio Borio said.