{"id":19787,"date":"2023-04-12T23:59:29","date_gmt":"2023-04-12T23:59:29","guid":{"rendered":"https:\/\/crowdfundjunction.com\/blog\/imf-economist-warns-of-side-effects-from-sharp-monetary-policy-tightening-says-financial-risks-have-increased-economics-bitcoin-news\/"},"modified":"2023-04-12T23:59:29","modified_gmt":"2023-04-12T23:59:29","slug":"imf-economist-warns-of-side-effects-from-sharp-monetary-policy-tightening-says-financial-risks-have-increased-economics-bitcoin-news","status":"publish","type":"post","link":"https:\/\/crowdfundjunction.com\/blog\/imf-economist-warns-of-side-effects-from-sharp-monetary-policy-tightening-says-financial-risks-have-increased-economics-bitcoin-news\/","title":{"rendered":"IMF Economist Warns of Side Effects From Sharp Monetary Policy Tightening \u2014 Says Financial Risks Have Increased \u2013 Economics Bitcoin News"},"content":{"rendered":"

(Originally posted on : Bitcoin News )<\/b>
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The International Monetary Fund\u2019s (IMF) economic counselor has warned of the side effects of sharp monetary tightening. Noting that \u201cInflation is much stickier than anticipated,\u201d he stressed that \u201cfinancial risks have risen.\u201d<\/strong><\/p>\n

IMF Economist\u2019s Warning<\/h2>\n

Pierre-Olivier Gourinchas, Economic Counsellor and the Director of Research of the International Monetary Fund (IMF), shared his global economic outlook in a blog post published by the IMF Tuesday.<\/p>\n

\u201cThe economic slowdown is most pronounced in advanced economies. Inflation is falling more slowly than anticipated,\u201d he wrote. \u201cRecent banking instability reminds us, however, that the situation remains fragile. Once again, downside risks dominate and the fog around the world economic outlook has thickened.\u201d He added:<\/p>\n

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Inflation is much stickier than anticipated, even a few months ago \u2026 Core inflation, which excludes energy and food, has not yet peaked in many countries.<\/p>\n<\/blockquote>\n

The IMF economist noted that \u201cactivity shows signs of resilience as labor markets remain very strong in most advanced economies,\u201d adding that \u201cour output and inflation estimates have been revised upwards for the last two quarters, suggesting stronger-than-expected aggregate demand.\u201d He stressed: \u201cThis may call for monetary policy to tighten further or to stay tighter for longer than currently anticipated.\u201d<\/p>\n

While stating that he is \u201cunconvinced\u201d about the \u201crisk of an uncontrolled wage-price spiral,\u201d the IMF economic advisor said:<\/p>\n

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More worrisome are the side effects that the sharp monetary policy tightening of the last year is starting to have on the financial sector, as we have repeatedly warned might happen. Perhaps the surprise is that it took so long.<\/p>\n<\/blockquote>\n

The IMF economic advisor explained that the financial sector had become too complacent about maturity and liquidity mismatches due to a prolonged period of low-interest rates and muted inflation. However, the tightening of monetary policy caused losses on long-term fixed-income assets and raised funding costs.<\/p>\n

\u201cRecent banking instability reminds us, however, that the situation remains fragile. Once again, downside risks dominate and the fog around the world economic outlook has thickened,\u201d he described, elaborating:<\/p>\n

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We are therefore entering a tricky phase during which economic growth remains lackluster by historical standards, financial risks have risen, yet inflation has not yet decisively turned the corner.<\/p>\n<\/blockquote>\n

What do you think about the view of the IMF\u2019s economic counselor and the director of research? Let us know in the comments section below.<\/strong><\/em><\/p>\n

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\nKevin Helms <\/h6>\n

\nA student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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Image Credits<\/b>: Shutterstock, Pixabay, Wiki Commons<\/em><\/p>\n

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