Epidemic, Fragmentation, Inflation(5)

Epidemic, fragmentation, inflation(5)

The IMF pointed out in the report that the recent increase in inflationary pressure is mainly caused by epidemic-related factors and temporary mismatches between supply and demand. Once these factors subside, inflation in most countries is expected to return to pre-epidemic levels in 2022, but this process is still facing high levels of uncertainty. Certainty. Affected by factors such as rising food prices and currency depreciation, high inflation in some emerging markets and developing economies may last longer.

The coexistence of rising inflationary pressures and fragile recovery has caused developed economies’ loose monetary policies to fall into a dilemma: Continued implementation of loose policies may increase inflation, erode the purchasing power of ordinary consumers, and may lead to stagflation of the economy; beginning to tighten monetary policy may help To curb inflation, it will push up financing costs, suppress the momentum of economic recovery, and may suspend the recovery process.

Under such circumstances, once the monetary policy of major developed economies turns, the global financial environment may tighten significantly. Emerging markets and developing economies may face multiple shocks such as a rebound in the epidemic, rising financing costs, and capital outflows, and economic recovery is bound to be frustrated. . Therefore, grasping the timing and pace of the withdrawal of loose monetary policies by developed economies is also critical to consolidating the momentum of global economic recovery.