An iCYMI from an International Monetary Fund (IMF) note prepared as a briefing for a G20 finance leaders meeting in India July 17 and 18.
- global headline inflation appears to have peaked
- in most of the G20 countries, particularly advanced economies, core inflation remains well above central banks’ targets
- a recution in supply chain disruptions and lower goods demand means likely disinflationary pressures from goods
- “However, services inflation – which is now the major driver of core inflation – is expected to take longer to decline,”
- “In the fight against inflation there are some early signs of monetary policy transmitting to activity, with bank lending standards tightening in the euro area and the United States. That said, policymakers should avoid ‘premature celebrations’: lessons from previous inflationary episodes show that easing policy too early can undo progress on inflation”
In April the Fund projected global economic growth at 2.8% in 2023, down from 3.4% in 2022. there has been no change to this forecast. But, it says:
- “Risks are mostly tilted towards the downside.”