IMF praises Fed policy but warns risk for emerging countries

The IMF greeted the decision of the Federal Reserve The US (Fed, central bank) to end its stimulus measures more quickly given inflationary pressures, but warned of the risks of a sharp rise in interest rates for emerging countries.

“The Federal Reserve has announced a proportionate and well-calibrated response to rising wage and price pressures by accelerating the reduction in its asset purchases and signaling in advance the trajectory of its benchmark rate,” said Gerry Rice, spokesman for the Federal Reserve. International Monetary Fund.

On Wednesday, the Federal Reserve announced that it will end its asset purchase program ahead of schedule, thus opening the door to three hikes in its benchmark rate in 2022, with an eye toward fighting inflation.

However, Rice warned that “this faster pace of normalization by the Fed increases the risks faced by countries that depend on dollar financing, especially emerging and developing economies.”

An abrupt rise in interest rates would raise financing costs for several emerging countries, already lagging behind in the global economic recovery from the crisis caused by the Covid-19 pandemic.

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