Central banks are 'sleeping at the driving wheel' as inflation spirals, says Brazil minister

Brazil's economic minister warned Friday that Western central bankers are "sleeping at the driving wheel" as economies slip deeper into a high inflation environment.

Speaking to CNBC's Geoff Cutmore via videoconference at The Davos Agenda virtual event, Paulo Guedes said that the inflation "beast" is already loose and set to become a real problem.

"My fear is that the beast is out of the bottle," Guedes told the panel.

"I think the central banks are sleeping at the driving wheel. They should be aware, and I think inflation will be a problem, a real problem very soon for the Western world," he said.

Far from being transitory as some central bankers have suggested, Guedes said that inflation could be a long-term issue for Western governments, who have left themselves little room for maneuver.

"I don't think inflation will be transitory at all," he said. "I think these supply adverse shocks will fade away gradually, but there's no arbitrage anymore to be exploited by the Western sides."