IMF: US monetary policy should focus on inflation risks


The International Monetary Fund warned today of increasing inflationary pressures, especially in the United States, and of the uncertainty caused by the emergence of the new strain of the Corona virus, Omicron, saying that officials of the US Federal Reserve (central bank) should focus more on inflation risks.

In today’s post, IMF Chief Economist Gita Gopinath and IMF Head of Monetary and Capital Markets Tobias Adrian warned that the resurgence of the pandemic and the Omicron strain has dramatically increased uncertainty about the global economic outlook.
But they added that the strength of the recovery and the extent of underlying inflationary pressures varied widely across countries, and that policies to deal with them could be adjusted to the unique circumstances of each economy, according to “Reuters”.

In the US, where consumer prices hit a 31-year high in October, they said, there are grounds for monetary policy to give more weight to inflation risks than other advanced economies, including the eurozone.
“It would be appropriate for the Federal Reserve to speed up the process of reducing asset purchases and pave the way for an increase in interest rates,” they added, confirming what Fed Chairman Jerome Powell said a few days ago.


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