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IMF: Global Economy At Risk Because of Inflation
Published: May 09, 2008
Washington, D.C.--Inflation is posing a huge threat to the global economy, the Washington, D.C.-based International Monetary Fund said Thursday.
"Inflation concerns have resurfaced after years of quiescence" because of higher energy and food costs, according to IMF deputy Managing Director John Lipsky, who also said growth was slowing on a global level, the Financial Times reports.
Crude oil prices recently reached a new high of almost $124 a barrel--and have seen a 99 percent rise in the past 12 months.
The factors increasing prices "appear to be fundamental in nature," Lipsky said.
He said he did not feel the situation would ever echo the early 1970s era--in which rapidly rising energy prices cause inflation to rise--but said the risk "cannot be discarded out of hand." Lipsky also called for policymakers to respond promptly to indications that inflation expectations might be increasing.
