IMF steering committee calls for inflation vigilance, draft statement shows

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WASHINGTON/BRUSSELS, Oct 14 (Businesshala) – The International Monetary Fund’s Steering Committee is urging global policymakers to increase monitoring of inflation dynamics and be prepared to take “decisive action to maintain price stability”, by Businesshala Seen is shown in a draft release.

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The statement, to be released Thursday by the fund’s International Monetary and Financial Committee (IMFC), highlights the significantly heightened concerns at this week’s IMF and World Bank meetings that inflation spikes may prove more sustainable.

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The 24-member IMFC said inflation was driven by consumer demand, supply chain disruptions induced by the pandemic and a sharp rise in energy and commodity prices.

The committee said, “The current surge in inflation is still assessed to be driven primarily by those temporary factors, but it now appears to be less transient than previously, and the upside risks to the inflation outlook in the near term.” growing in many countries,” the committee said. .

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It added that some central banks have taken proactive steps to withdraw monetary stimulus to avoid possible de-anchoring of inflation expectations.

The IMFC called on central banks to be alert to the effects of the second round of inflationary forces and to provide clear communication on shaping expectations.

“Special attention should also be paid to the build-up of financial vulnerabilities resulting from the rise in house prices, historically high asset prices, increased activity related to crypto assets and the withdrawal of support measures,” the panel said. Tools should be used to reduce the risks going forward.

With many low-income IMF member countries facing fragile recoveries, the IMFC also said it supports stronger fund linkages with these countries, with more traditional financing requiring structural reforms than emergency financing. The emphasis is on order.

But as the IMF develops a new Resilience and Sustainability Trust to help allocate $650 billion of reserve assets to a wide range of vulnerable middle-income countries, the IMFC cautioned that the new vehicle may be underpinned by the IMF’s mandate. should correspond to. Crisis lenders of the world.

G20 finance leaders said on Wednesday they were open to exploring options to channel some SDR reserves into poorer countries through multilateral development banks, but the IMFC cautioned against this.

“In general, we also consider it important that the IMF cooperate closely with multilateral development banks, however, we see little scope for transmitting SDRs through these institutions, given that the direction towards development financing A change would be a departure from the IMF’s current model.” said in the draft statement.

Reporting by David Lauder and Jan Strupzewski, Editing by Franklin Paul and Paul Simao

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