G20 leaders said on Wednesday that central banks in their major economies will continue to assess the pace of monetary policy tightening, keeping in mind the need to limit “cross-country spillovers”.
In a Leaders’ Declaration, G20 members reaffirmed their commitment to avoid excessive exchange rate volatility, recognizing that “the prices of many currencies have moved significantly” this year.
“G20 central banks are closely monitoring the impact of price pressures on inflation expectations, and will continue to appropriately assess the pace of monetary tightening in a clear, data-driven manner,” the statement said.
He added that central banks will also bear in mind the need to limit the fallout, referring to concern among emerging economies about the impact that decisions to raise US interest rates sharply could have on their markets.
“The independence of central banks is necessary to achieve these goals and to support the credibility of monetary policy,” he said.
pressures on developing countries
Chinese President Xi Jinping had called on the wealthy G20 countries to limit the repercussions of raising interest rates, at a time when the US Federal Reserve is tightening its policies to combat inflation.
“We must control global inflation and resolve systemic risks in the field of economy and finance,” Xi said at the G20 summit in Bali last Tuesday.
“Advanced economies must reduce the negative repercussions of adjustments in their monetary policy and ensure debt stability to remain at a sustainable level,” he added.
The Federal Reserve raised interest rates to their highest level since before the 2008 financial crisis, at a time when it seeks to curb rising inflation.
This US monetary move led to a rise in the value of the dollar to levels not seen in two decades, putting pressure on developing economies that depend on exports and are also trying to reduce inflation.
Slow down the pace of interest rate hikes
But Lael Bernard, Vice Chair of the US Federal Reserve (central bank), said that the bank will reduce the pace of increasing key interest rates in the United States very soon, suggesting that the next increase in interest will be in the range of 50 basis points after increasing interest 4 times in a row by 75%. basis point each time.
“It would be appropriate very soon to slow the pace of interest rate increases, but I think what is really important is to confirm that we have done a lot, but there is still work,” Bloomberg news agency quoted Bernard a few days ago as saying during a panel discussion at the agency’s office in Washington. We have more to do.”
And the US Central Bank raised the main interest rate from about 0% last March to between 3.75 and 4%, in an attempt to rein in inflation, which reached its highest level in nearly 4 decades.