The IMF urged the Fed to quickly wind down the quantitative easing program with tightening monetary policy and taking measures to combat rising prices, writes CNBC.
The IMF reacted to the decision of the FRS leadership, led by Jerome Powell to begin the gradual curtailment of the quantitative easing program, which provides for the purchase of government and corporate bonds in order to reduce their profitability and provide additional liquidity to the banking system.
The regulator plans to reduce the volume of purchases of bonds by $ 15 billion monthly – from $ 105 billion in November. But according to the IMF, such a pace will not be sufficient, especially against the background of the detection of a new omicron strain of coronavirus. In addition, the Fed was recommended to think about raising the base rate, which is currently at the level of 0-0.25 percent per annum.
The increase in the money supply in the American economy due to the quantitative easing program leads to inflation due to growth demand. At the end of October, the consumer price index – a key indicator of inflation in the United States – reached 6.2 percent in annual terms, which was the highest result in the last 30 years.