LONDON: Global central bank umbrella body, the BIS, eased its hardline stance on inflation on Monday, calling recent progress encouraging, but stressed that central banks were not out of the woods yet.

Global economic data has begun to show a clear trend that multi-decade highs in inflation -- caused by the rebound from the COVID-19 pandemic and spike in energy prices -- are in the rear-view mirror.

Money markets are pricing in over 100 basis points of rate cuts from both the US Federal Reserve and European Central Bank next year, and have shifted the expected timing of the first moves firmly into the first half of 2024.

The pace of that shift has left some policymakers uncomfortable and for the Bank for International Settlements, which hosts behind-closed-doors meetings of the world's top central bankers, there is a balance to strike.

"The outlook has improved but the key point we have to bear in mind is that we are not out of the woods and that the job has to be done," Claudio Borio, the head of BIS's monetary and economics unit, said.

Central banks are proving "laser focused" in bringing inflation down, Borio added, but in a further sign of the softening rhetoric he said they needed to be "flexible and nimble" if a slowing global economy required it.

"Unfolding of credit risk" following the huge rise in borrowing costs was still to come, he said, although the measured reaction of markets to October's rise in Middle East tensions after Hamas' attack on Israel was reassuring.

The quarterly report from the BIS, often dubbed the central bankers' central bank, looked a number of specific issues bubbling under the surface in global finance.

One of those was a corner of the consumer credit market known as buy-now-pay-later, or BNPL, which has grown in popularity in recent years.