The International Monetary Fund’s No. 2 official says that the war between Israel and Hamas could spur inflation and hamper global growth if it turns into a wider conflict that causes a significant increase in oil prices.
(Bloomberg) — The International Monetary Fund’s No. 2 official says that the war between Israel and Hamas could spur inflation and hamper global growth if it turns into a wider conflict that causes a significant increase in oil prices.
Modeling by the organization, whose mandate includes global economic surveillance, shows that a 10% increase in oil prices leads to inflation being 0.4 percentage points higher a year later, Gita Gopinath, the fund’s First Deputy Managing Director, said Wednesday in an interview with Bloomberg TV’s Francine Lacqua.
Guardians of world finance have gathered here for the annual meetings of the IMF and World Bank against the backdrop of ongoing fighting after Hamas attacked Israel from the Gaza Strip. Upcoming events include a ministerial roundtable discussion on Ukraine at 5:30 p.m. that US Treasury Secretary Janet Yellen will address.
All times are for Morocco.
Peru’s Velarde Cautious on Policy (12:03 p.m.)
Latin America’s longest-serving central bank chief, Julio Velarde, said he needs to be sure inflation has been brought under control before he can be more assertive with monetary policy in Peru.
“We have to be sure inflation is defeated before we can be more aggressive,” Velarde said. “We are going to see numbers, core inflation and expectations.”
Citigroup on Capital Buffers (11:45 a.m.)
Citigroup Inc. Chairman John C. Dugan said US plans to hike capital buffers for the biggest Wall Street banks are unwarranted and will push lending and intermediation away from the banking sector.
“We believe it really will have a material impact on the amount of lending that US companies can do generally, which is not a good thing when the economy is more or less in a precarious position,” Dugan said.
Kganyago Says More Work to Do (11:45 a.m.)
South Africa’s central bank has more work to do to rein in inflation that remains elevated, with higher food and oil costs posing risks to the outlook for price-growth, central bank Governor Lesetja Kganyago said.
“The job on the inflation front is not yet done,” he said. “We remain vigilant and we stand ready to deploy our tools as necessary.”
Yellen on Sanctions (11:40 a.m.)
US Treasury Secretary Janet Yellen said the Biden administration hasn’t ruled out new sanctions against Iran in relation to renewed conflict in the Middle East, but no decisions have been made.
“I wouldn’t take anything off the table in terms of future possible actions, but I certainly don’t want to get ahead of where we are now,” Yellen said Wednesday during a press conference.
Higher Rates May Be Needed (11:32 a.m.)
Federal Reserve Governor Michelle Bowman said interest rates may need to rise further and stay higher for longer than previously expected to get inflation down to the central bank’s goal.
Higher-for-Longer Rates Worry (11:17 a.m.)
The prospect that high interest rates will keep constricting the global economy is worrying World Bank officials as they look to the impact on nations nursing large debts.
Bigger, Better World Bank (11:04 a.m.)
Ajay Banga, the World Bank’s new president, said the lender must become bigger as well as better at measuring its impact so it can help fund some of the trillions of dollars in global development needs.
US Treasury Debt Dynamics (10:30 a.m.)
The forces underlying the Treasury debt market are extremely adverse as the US is on an unsustainable fiscal path, a senior International Monetary Fund official said.
–With assistance from Jana Randow, Ekow Dontoh, Mirette Magdy and Eric Martin.
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