(Bloomberg) -- Bank of England policymaker Catherine Mann said the fragmenting global economy will leave countries more exposed to inflation shocks in future, posing a test for central banks. 

Mann said on a panel at the International Monetary Fund that central banks need to be on high alert because the “great moderation” — the years of stable inflation and low volatility — is over. As a result, they will need to exercise their independence more actively, she said Friday.

“A lot has been ascribed to central bank independence and inflation targeting,” Mann said about the Great Moderation. “However, global integration was also a very important ingredient. So a real concern is, moving forward, fragmentation.”

The former Citigroup Inc. chief global economist warned that “central banks are going to have to use their autonomy very effectively going forward. There will be more shocks, greater inflation volatility. Central banks will have to be always on alert to this upward bias to inflation.”

She added that the fragmentation of global trade and capital flows is leading to “less trade, less finance.” Both emerging market and advanced economies are losing out as a result.

Disengagement Worry

For central banks, it means the potential growth rate of an economy will be lower. This lower “speed limit” will create a problem for central banks, she said, as it’s inflationary.

While a reshaping of the global economy into two separate blocs might not be so destabilizing — as each bloc could be big enough to ensure diverse trade and capital flows — what’s in process is more an outright disengagement, Mann said. Moves toward “onshoring” and “friend-shoring” supply chains mean a more volatile environment, she said.

Read More: What ‘Friend-Shoring’ Means for the Future of Trade: QuickTake

“The magnitude of what is being given up is quite large,” Mann said. “In terms of what you gain from global disengagement, I think people are unwilling to look at the price.”

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