IMF Deputy Managing Director: "Inflation May Rise Faster Than Expected by Central Banks Worldwide"

[Asia Economy New York=Special Correspondent Seulgina Jo] A warning has emerged that the speed at which inflation is soaring could be much faster than the expectations of central banks around the world. This signals that central banks, including the U.S. Federal Reserve (Fed) and the Bank of Korea, may need to pursue more aggressive monetary tightening.

Kenji Okamura, IMF Deputy Managing Director, stated in a written interview with Bloomberg News released on the 2nd (local time), "The risk that inflation expectations will drift away from central banks' inflation targets is increasing," and urged "policymakers to respond with more proactive tightening."

The interview was released amid expectations of a so-called big step of raising the benchmark interest rate by 0.5 percentage points at the May Federal Open Market Committee (FOMC) regular meeting scheduled for the 3rd and 4th.

Deputy Managing Director Okamura emphasized, "We need to monitor the pulse of the economy and adjust policies as necessary," adding, "When tightening monetary policy, major central banks must communicate clearly while keeping in mind the spillover risks to vulnerable emerging and developing countries."

He also pointed out the greatest risk facing the global economy, stating, "The priority is to end the war in Ukraine," and noted, "This war directly affects many other challenges we face, such as high debt, food security, and inflation." He explained that beyond the human toll, the Ukraine war will cause broad economic consequences that slow economic growth and fuel inflation.

Regarding the recent trend of deglobalization, Deputy Managing Director Okamura remarked, "It should be recognized that globalization has brought significant economic benefits, especially to developing countries, and was achieved by reducing costs and increasing efficiency for all countries." He also added, seemingly targeting China and Russia, "I am concerned about countries divided into blocks that harm global prosperity."

Along with this, Deputy Managing Director Okamura stressed that governments worldwide need to allocate additional resources to combat COVID-19 and strengthen domestic and international health systems. It is estimated that about $15 billion will be needed this year, followed by annual grants of $10 billion thereafter.

This content was produced with the assistance of AI translation services.