IMF steering committee urges central banks to closely monitor inflation -communique
The International Monetary Fund's steering committee on Thursday urged global policymakers to monitor pricing dynamics closely and act appropriately to deal with inflationary risks, including looking through transitory inflationary pressures that will fade. "Central banks are monitoring price dynamics closely and can look through inflation pressures that are transitory. They will act appropriately if risks of inflation expectations de-anchoring become concrete," the International Monetary and Financial Committee (IMFC) said in a final communique.
The language was toned down from an earlier draft that called for central banks to be ready to take "decisive actions to maintain price stability." Inflation concerns, stoked by pent-up demand, supply chain bottlenecks, higher energy and commodity prices and weather events, have become a significantly increased concern at this week's IMF and World Bank annual meetings in Washington.
The 24-member IMFC, which represents the divergent interests of the Fund's 190 member economies, called for clear communications by policymakers to limit negative cross-country spillovers and to use macroprudential tools to limit financial vulnerabilities. The statement noted the growing divergences between rich and poor countries in economic recovery and access to vaccines, noting that recovery risks are tilted to the downside.
"Against a complex environment, we will carefully calibrate our domestic policies to the evolving pandemic and available policy space," the committee said, adding that health spending was the top priority, while the focus in some countries could shift from crisis to promoting growth and long-term fiscal sustainability. The IMFC said it welcomed the IMF's efforts to establish a new Resilience and Sustainability Trust to help channel a $650 billion allocation of reserve assets to provide affordable long-term financing to countries undertaking structural reforms and working to maintain balance-of-payments stability.
"The RST should preserve the reserve asset characteristics of the SDRs," the IMFC said. "We call upon the IMF to develop and implement the RST and collaborate closely with the World Bank in this process, and to provide technical support in exploring viable options for channeling SDRs through multilateral development banks."
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)