The International Monetary Fund (IMF) published a report on Sunday, citing the impact of rising oil prices on global inflation and growth prospects.
key takeaways
“For some, rising oil prices may echo the 1970s, when geopolitical tensions also caused fossil fuel prices to rise.”
“Memories of high inflation and the slow growth that followed, known as stagflation, have fueled concerns about a possible repeat. However, the important thing is that times have changed.
“Central banks have also changed since the 1970s. More are independent today, and the credibility of monetary policy has been greatly strengthened during the intervening decades.”
“We expect global growth to approach the pre-pandemic average of 3.5%even after our April World Economic Outlook lowered projections, but it could still slow more than forecast and inflation could turn out higher than expected.”
“This may be more salient for parts of Europe, given their relatively greater reliance on Russian energy imports.”
Source: Fx Street
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