The International Monetary Fund (IMF) on Friday warned of intensifying inflationary pressures, especially in the United States, and new uncertainties caused by the Omicron variant of COVID-19, and said U.S. central bankers should focus more on inflation risks.
In a blog published Friday, IMF chief economist Gita Gopinath and Tobias Adrian, head of the fund’s monetary and capital markets division, warned that the resurgence of the pandemic and the Omicron variant had sharply increased uncertainty around global economic prospects.
In the United States, where consumer prices hit a 31-year high in October, they said, there were grounds for monetary policy to put greater weight on inflation risks, compared to other advanced economies, including the euro area.
Over time, they wrote, other countries may need to tighten monetary policy earlier than expected if inflationary pressures became more broad-based.
They called on policymakers to remain agile, focused on data, and carefully communicate their policy actions “so as not to trigger a market panic that would have deleterious effects,” especially on emerging and developing economies.
They said rising energy and food prices had fueled higher inflation in many countries, and global factors such as high commodity food prices could continue to add pressure in 2022.