Reuters/WASHINGTON/BRUSSELS – The United States
IMF steering committee encouraged global policymakers on Thursday to closely monitor price trends and act properly to cope with inflationary concerns, including looking through short-term inflationary pressures that would dissipate.

“The central banks keep a tight eye on pricing developments and can see through temporary inflation pressures.
if the dangers of inflation expectations de-anchoring materialize, they will respond accordingly “Final communiqué from the International Monetary and Financial Committee (IMFC)

Earlier drafts called on central banks to be ready to take “decisive steps to ensure price stability,” but that language has been softened.

High energy and commodity prices and weather events have fueled inflation fears at this week’s annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington, D.C.

Policymakers should communicate clearly to prevent negative cross-country spillovers and to utilize macroprudential instruments to limit financial vulnerabilities, according to the IMFC’s 24 members, who represent the diverse interests of the Fund’s 190 member nations.

The statement underlined the rising disparities in economic recovery and vaccination availability between affluent and poor nations, emphasizing that the risks of recovery are skewed to the negative.

It added that health spending was the top priority and that in some countries the focus could shift from crisis to growth and long-term fiscal sustainability. “Against a complex environment, we will calibrate our domestic policies to the evolving pandemic and available policy space,” the committee said.

A new Resilience and Sustainability Trust established up by the IMF is welcomed by the IMFC, which will assist channel $650 billion in reserve assets toward providing cheap long-term financing to countries undergoing structural reforms and trying to keep their balance of payment stable.

SDR reserve asset characteristics should be preserved, according to the IMFC.
To this end, we urge the IMF to work closely with the World Bank to create and implement the RST, as well as to provide technical assistance in identifying suitable possibilities for the channeling of SDRs through MDBs.”

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