Nigeria: Inflation - Central Banks Should Raise Interest Rates - IMF

21 April 2022

The International Monetary Fund (IMF), has called on Central banks across the globe to raise interest rates, in order to halt the escalating inflationary trends.

IMF Director of Monetary and Capital Markets, Tobias Adrian, made this call at a press briefing on the latest Global Financial Stability Report, in Washington DC, United states of America, on Tuesday,

Describing inflation as the most important challenge, Adrian suggested that actions were needed to aggressively bring inflation down back to target.

According to him, "Consumers expect prices to continue to rise rapidly in the short term before inflationary pressures start to recede over the medium term. But this could change.

"There's a risk that eventually inflation expectations could de-anchor and there could be more of an expectation of inflation even in the medium term. Central banks have to counteract that by tightening monetary policy, slowing economic activity, to bring inflation down."

In a blog on the same day, Adrian said the resilience of financial markets would be tested by the war in Ukraine, which is unfolding amid an already slowing recovery from the pandemic.

"Europe bears a higher risk than other regions due to its geographic proximity to the war, reliance on Russian energy, and the non-negligible exposure of some banks and other financial institutions to Russian financial assets and markets."

"Emerging and frontier markets now face higher risks of capital outflows, with differentiation across countries between commodities importers and exporters, even as the US central bank raises interest rates and unwinds its balance sheet.

"Amid geopolitical uncertainty, the interplay of tighter external financial conditions and the US Federal Reserve normalisation is likely to increase the risk of capital flight," Adrian added

AllAfrica publishes around 500 reports a day from more than 100 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.