IMF deputy director: central banks must be in driver’s seat in bringing inflation down to target
YEREVAN, August 29, /ARKA/. Central banks must be in the driver's seat in bringing inflation down to target and anchor inflation expectations, the International Monetary Fund's (IMF) first deputy managing director Gita Gopinath said last Friday.
Speaking at the Jackson Hole Symposium, she said the job of central bankers is much more difficult because of the coronavirus pandemic and the Russia-Ukraine conflict.
According to her, the current patterns of inflation expectations provide stability. Nevertheless, with double-digit inflation rates in the U.S. and many other advanced economies, as well as even higher rates in developing economies, the risks to the global economy are becoming the most real in the past few decades.
The IMF deputy head added that over the next three years 'we should expect higher inflation rates, which will complicate the monetary policy of the countries.'
In addition, financial institutions, based on the experience of the pandemic and the current international situation, should consider that disruptions in supply chains may take on a long-term nature, leading to higher prices, she added.
Overall, the IMF believes that financial institutions should take more proactive measures to curb inflation and develop new models that will more accurately predict the dynamics of economic indicators in the event of an economic shock.
"Accordingly, central banks must act decisively to ensure that inflation expectations remain stable. We can't expect to continue sustained economic growth without restoring price stability," Gopinath summarized.
According to the US Labor Department, the nation's consumer prices rose at an annualized rate of 8.5% in July from 9.1% the month before. In May, the year-over-year increase in consumer prices was 8.6%, while in April it was 8.3%.
As Treasury Secretary Janet Yellen stressed in early June, the inflation rate will remain high in the US for the near future; this has become the major economic problem for the authorities. -0-
