A blog published on Monday by the International Monetary Fund has a cautionary note for emerging economies: US monetary tightening to happen faster than expected. With the US Federal Reserve likely to raise rates earlier than summer, financial conditions globally are set to suddenly turn a little more dire.
The US economy has bounced back so fast that excess money and inflation have caught the attention of policy. Growth is not an American concern. Neither is unemployment, given the great resignation wave that ravaged its economy and left a gaping hole in American labor availability. The price uptrend, however, is a relatively new threat and should supply disruptions persist and wage pressures intensify, it may require a steep hike in rates in an effort to achieve stability on a parameter that the US Fed has already failed to. has been made aware of the dangers of Emerging economies, unfortunately, will end up in collateral damage if capital runs out as interest-rate differentials narrow and their currencies lose value. India has huge dollar reserves which can support our economy. Still, a deflation of increased wealth around the world can send shudders around. We must be alert.
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