IMF warns on inflation, says the Fed and others should be prepared to tighten policy
Central banks such as the Federal Reserve should be prepared to tighten policy in case inflation gets out of control, the International Monetary Fund warned in a report Tuesday.
While the IMF said it largely concurs with assessments from the Fed and many economists that the current global spate of price increases eventually will ease, it noted there is “high uncertainty” around those forecasts.
The cautionary tone mentioned the U.S., as well as the U.K. and other developed economies, as places where “inflation risks are skewed to the upside.”
“While monetary policy can generally look through transitory increases in inflation, central banks should be prepared to act quickly if the risks of rising inflation expectations become more material in this uncharted recovery,” Gita Gopinath, the IMF’s economic counselor and director of research, said in an executive summary accompanying the report.
“Central banks should chart contingent actions, announce clear triggers, and act in line with that communication,” she added.
Reference: CNBC
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