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IMF Revises Global Growth and Core Inflation Higher

  • Major central banks must hold restrictive interest rates with little progress reducing core inflation seen this year, the IMF said Tuesday.
  • Core prices will rise 5.1% across advanced economies in 2023, matching last year's gain, according to the Fund’s updated WEO. The report boosted the core inflation forecast 0.3pp for this year and 0.4pp to 3.1% next year vs projections made in April.
  • "It is critical to avoid easing rates prematurely, that is, until underlying inflation shows clear and sustained signs of cooling," IMF research director Pierre-Olivier Gourinchas wrote in a blog post.
  • Downside growth risks remain prominent amid the Ukraine invasion but the report's tone was less downbeat following the U.S. debt ceiling agreement and the WHO saying the major Covid emergency has wound down. The Fund boosted the 2023 world growth forecast 0.2pp to 3%, with the US at 1.8% (+0.2pp), China 5.2% (unch), Euro Area 0.9% (+0.1pp) and UK 0.4% (+0.7pp).

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