WASHINGTON (Businesshala) – The International Monetary Fund’s steering committee on Thursday urged global policymakers to closely monitor pricing dynamics but “watch out” for inflationary pressures that are fleeting and the economy returns to normal. Will fade together.
The International Monetary and Financial Committee (IMFC), made up of 24 finance ministers and central bank governors from IMF member countries, said in a final release Here That governments should “carefully examine” domestic policies for an emerging pandemic.
“We will continue to prioritize health spending and protect the most vulnerable, while continuing to focus, as appropriate, on everything from crisis response to spurring growth and maintaining long-term fiscal stability,” he said. ” They said.
Inflation concerns, lack of demand, supply chain constraints, high energy and commodity prices and weather events have been the subject of a heated debate at the annual meetings of the IMF and World Bank this week, and are here to undermine the global growth outlook. contributed to the fund. Tuesday.
“Central banks are closely monitoring price dynamics and may see inflationary pressures that are transitory. With reference to banks using monetary policy instruments to control inflation, the IMFC said, “they will act appropriately if the risks of de-anchoring inflation expectations become concrete.”
The language was dropped from an earlier draft asking central banks to be prepared to take “decisive action to maintain price stability”.
transitory or sustainable?
Policy makers are grappling with the question of inflation as rich countries grapple with recovery from the pandemic, while developing economies struggle with COVID-19 variants, low vaccine access and lack of resources. The IMF has warned that a sudden tightening of monetary policy in the United States or Europe could lead to disastrous fund outflows from developing countries.
“The important question is to know whether it is transient inflation or not. No one has the answer to that important question,” French Finance Minister Bruno Le Maire told reporters on Thursday, adding that this week he was holding talks with US Federal Reserve President Jerome Powell, US Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde. Discussing this together.
Swedish Finance Minister Magdalena Andersen, who chaired the IMFC panel, said at a news conference that more initiatives are needed to reduce global shortages of key commodities, adding: “It is important that we strengthen global value chains today. doing a better job than that.”
The IMFC also called for clear communication by policymakers to limit negative cross-country spillovers and use macroprudential tools to limit financial vulnerabilities.
The statement noted a growing gap between rich and poor countries in economic recovery and access to vaccines, noting that recovery risks are sloping downward.
IMFC said it has set up a new Resilience and Sustainability Trust (RST) to help allocate $650 billion of reserve assets to provide affordable long-term financing to poor and middle-income countries undertaking structural reforms. welcomed the efforts of the IMF. stability of the balance of payments.
“RST should preserve the reserve asset characteristics of SDRs,” said IMFC. “We call on the IMF to provide technical assistance in developing and implementing the RST and to cooperate closely with the World Bank in this process and to explore viable alternatives to disseminate the SDR through multilateral development banks.”
G20 finance ministers on Wednesday backed plans for a new trust.