The biggest challenge facing central bankers now is reducing inflation, International Monetary Fund managing director Kristalina Georgieva said on Thursday, while her deputy warned of the growing risk of economic fragmentation.
Georgieva told a conference in Washington that policymakers should take specific measures to ease the rise in food and fuel prices while avoiding measures that could fuel inflation or derail monetary policy.
Gita Gopinath, First Deputy Managing Director, speaking at the same conference, said the strengthening dollar, now at its highest level in more than 20 years, and concerns about financial fragility also posed major challenges in the current environment, and there is no room for error.
“There is really a very narrow path to getting things right,” said Gopinath, noting that the sharp rise in the dollar had important macroeconomic implications for a number of countries around the world.
Gopinath said officials need to be aware of potential vulnerabilities, noting that there is a critical lack of data on risks to financial stability due to hidden leverage in non-bank financial institutions.
Another huge challenge, Gopinath said, is the increasing risk of geoeconomic fragmentation, noting that the Covid-19 pandemic and the war in Ukraine had “significantly increased” risks.
Source: CNN Brasil
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