U.S. Fed could accelerate taper of asset purchases amid surging inflation: IMF officials

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WASHINGTON, Dec. 3 (Xinhua) -- The U.S. Federal Reserve could accelerate the taper of asset purchases amid surging inflation, senior officials at the International Monetary Fund (IMF) said on Friday.

"We see grounds for monetary policy in the United States ... to place greater weight on inflation risks as compared to some other advanced economies including the euro area," IMF chief economist Gita Gopinath and Tobias Adrian, director of the IMF's Monetary and Capital Markets Department, said in a blog post.

"It would be appropriate for the Federal Reserve to accelerate the taper of asset purchases and bring forward the path for policy rate increases," they said.

Meanwhile, it is essential for major central banks to "carefully communicate their policy actions" so as not to trigger a market panic that would have deleterious effects not just at home but also abroad, especially on highly leveraged emerging and developing economies, the IMF officials noted.

"Given the extremely high uncertainty, including from Omicron, policymakers should remain agile, data-dependent, and ready to adjust course as needed," they said.

The IMF officials expected the mismatch in supply and demand to attenuate over time reducing some price pressures in countries.

"Under the baseline, shipping delays, delivery lags, and semiconductor shortages will likely improve in the second half of 2022. Aggregate demand should soften as fiscal measures come off in 2022," they said.

The Fed began last month to reduce its monthly asset purchase program of 120 billion U.S. dollars by 15 billion dollars. At this pace, the Fed would end its asset purchases by June next year.

But some Fed officials and economists have urged the central bank to accelerate the pace of tapering to give more leeway to raise rates sooner amid inflation pressures.

"The economy is very strong and inflationary pressures are higher, and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases ... perhaps a few months sooner," Fed Chairman Jerome Powell said Tuesday at a congressional hearing.

The consumer price index (CPI) rose 6.2 percent in October from a year earlier, the strongest annual gain in over 30 years, according to the U.S. Labor Department. Enditem

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