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The International Monetary Fund’s steering committee is urging global policy-makers to increase their monitoring of inflation dynamics and be ready to take “decisive actions to maintain price stability,” a draft communiqué seen by Reuters showed.

The statement, to be issued by the Fund’s International Monetary and Financial Committee (IMFC) on Thursday, highlights significantly increased concerns at this week’s IMF and World Bank fall meetings that inflation spikes may prove more durable.

The 24-member IMFC said inflation was being aggravated by pent-up consumer demand, pandemic-induced supply chain disruptions and a sharp rise in energy and commodity prices.

“The current surge in inflation is still assessed to be mainly driven by those temporary factors but now appears less transitory than previously expected, and upside risks to the inflation outlook in the near term are increasing in a wide range of countries,” the committee said.

It added that some central banks have taken pro-active measures to begin withdrawing monetary stimulus to avoid a potential de-anchoring of inflation expectations.

The IMFC called for central banks to remain vigilant for second-round effects of inflationary forces and to provide clear communications on shaping expectations.

“Special attention should also be given to the buildup of financial vulnerabilities stemming from house price increases, historically high asset prices, increased crypto asset-related activities, and the withdrawal of support measures,” the panel said, adding that macroprudential and regulatory tools should be used to mitigate risks going forward.

With many low-income IMF member countries facing fragile recoveries, the IMFC also said it supports stronger Fund engagement with these countries, with an emphasis on more traditional financing arrangements requiring structural reforms than on emergency financing.

But as the IMF develops a new Resilience and Sustainability Trust to help channel a $650-billion allocation of reserve assets to a broader range of vulnerable middle-income countries, the IMFC cautioned that the new vehicle needed to be in line with the IMF’s mandate as the world’s crisis lender.

G20 finance leaders on Wednesday said they were open to exploring options to channel some SDR reserves to poorer countries through multilateral development banks, but the IMFC cautioned against this.

“In general, we also deem it important that the IMF closely co-operates with multilateral development banks; however, we see less scope for channelling SDRs through these institutions, given that a shift towards development financing would constitute a departure from the IMF’s existing model,” the draft statement said.

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