The decision by the United States Federal Reserve (Fed) to accelerate the reduction of bond purchases is a well-calibrated response to the mounting pressures on wages and prices, but increases the risks for emerging markets, said the spokesman for the IMF, Gerry Rice.
A day after the Fed flagged three potential rate hikes in 2022 and said it would end pandemic-related bond purchases in March, Rice said the faster pace of monetary policy normalization increases risks. facing emerging and developing markets that depend on dollar financing.
“The Fed has announced a well-calibrated and proportionate response to rising wage and price pressures, accelerating its downsizing of its asset purchases and signaling a faster path for federal funds rates.Rice said.
“Continuing to set policy in such a data-driven way will help keep inflation expectations anchored”He added.
“However, this faster pace of Fed normalization increases the risks faced by countries that depend on dollar funding, especially emerging and developing economies.Rice said.
The IMF has been more concerned in recent weeks about the possibility that inflation will cause a sharper tightening of monetary policy in advanced countries, and has urged central banks to contain inflation before it spirals. wage prices.
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