IMF chief warns of multiple inflation shocks in market turmoil | World economy

Global financial leaders need to prepare for multiple inflationary shocks as fears of a global recession continue to hurt markets around the world, the head of the International Monetary Fund warned.

Managing Director of the IMF, Crystalinage OrgievaSaid that it is becoming increasingly difficult for central banks to reduce inflation without causing a recession.

Georgieva told Reuters at a meeting of the G7 Treasury Minister and Central Bank Governors in Germany. Increased pressure on energy and food prices from the Russian war in UkraineAnd supply chain disruptions and cost pressures caused by China’s Zero-COVID policy.

“I think what we need to start to be more comfortable is that it may not be the last shock,” said Georgieva, who said the outbreak of the Omicron coronavirus variant at the end of last year was inflationary. He added that he showed that it was not “temporary.” Time shock.

Inflation has risen to its highest level in about 40 years in both England This year is the United States, the highest level in the euro area since statistics began in 1997.

Investors are afraid that the central bank will risk a “hard landing” and put the economy in recession as it raises interest rates and lowers inflation towards its target.

The London stock market fell into the red on Thursday, the FTSE 100 index fell 146 points and the afternoon trading fell 2% at 7292.

The Pan-European Stocks 600 Index fell 1.3% due to the weakening of personal care companies, food and beverage companies, tech stocks and retailers.

Wall Street opened lower the day after the worst sold-out in nearly two years, as major retailers reported that rising inflation was damaging consumer spending and eating up profit margins.

Coles, a US department store chain, responded to Target and Wal-Mart earlier this week, significantly reducing its profit and sales outlook.

US unemployment claims have increased for the third straight week, with 218,000 Americans seeking unemployment assistance last week. Growth has almost stagnated this month as rising costs have hit factories, according to a survey by manufacturers in the Philadelphia region.

Fiona Cincotta, Senior Financial Markets Analyst at Citi Index, said:

Inflation has lost confidence in UK factories, where investment plans remain weak, according to the latest industry trends report from CBI’s corporate body. The number of manufacturers planning to raise their prices remained close to record highs.

Federal Reserve Chairman Jerome Powell has indicated that the US central bank will raise interest rates by 50 basis points in June and July with a determination to reduce US inflation from 8.3% in April. It caused fear of a global slowdown.

Joostvan Leaders, senior investment strategist at Wealth Manager Van Lanschot Kempen, warned that the Fed would not normally achieve a soft landing.

“Usually, a recession is needed to curb inflation. If there are no major imbalances in the economy, especially if the family or business does not have a budget deficit, the chances of a soft landing are slightly higher. It just so happens that that’s exactly what we’re facing right now, so while the Fed is reducing that work, it could have positive results, “says Van Renders.

IMF chief warns of multiple inflation shocks in market turmoil | World economy

Source link IMF chief warns of multiple inflation shocks in market turmoil | World economy

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