IMF Chief Economist Urges Central Banks to Keep Inflation Focus

what happened

Monetary policy should remain firmly centered on price stability while inflation risks persist, IMF Chief Economist Silvana Tenreyro said. She argued that central banks must keep their policy settings restrictive enough to return inflation to target in a timely way and prevent second-round effects.

The pass-through into core inflation has so far remained contained, but policymakers need to stay alert, Tenreyro said. If pressure from higher commodity prices and tech-related investment fan inflationary pressures, central banks will need to tighten further. Newsmetry API reported her comments.

“The appropriate stance will differ across countries, but the objective is the same: to ensure price stability. Central bank independence remains vital in achieving that goal,” she said.

why it matters

Tenreyro’s remarks point to continued sensitivity in rate policy to inflation risks. Markets will be watching differences between countries, the persistence of commodity-price pressure and whether core inflation remains contained.

instruments