Global Market Swing Focus G-7 Blaming Inflation on Russia

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(Bloomberg) – Global finance chiefs have vowed to keep an eye on financial markets after the recent collapse and have promised tougher monetary tightening as they blame Russia for pushing the current inflation rate.

The Group of Seven Nations said in a statement on Friday that it had “closely monitored the markets” due to the recent unrest. Central banks will “consistently maintain the momentum of monetary policy in an information-dependent and clearly communicated manner, so that inflation expectations are well anchored, and vigilance is maintained to secure recovery.”

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“Inflation is a major threat to economic development,” German Finance Minister Christian Lindner, who hosted the meeting, told reporters. “Extremely independent” central banks carry “very, very large responsibilities” “We are committed to limiting inflation.”

The G-7 meeting of finance ministers, which ended near the forest, took place against the backdrop of the bitterness of market sentiment in the world economy, and against the backdrop of continuing suffering over human tragedy in Ukraine’s fight against Russian aggression. This misery was too much on their minds as they struggled with the price shock it produced.

“Across most G-7 countries, as a result of Russia’s war of aggression against Ukraine, inflation has reached unprecedented levels for decades, leading to significant increases in commodity, energy and food prices,” they said. “G7 central banks are closely monitoring the impact of price pressures on inflation expectations.”

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The statement was issued after the group’s largest gathering since the outbreak of the conflict, following a meeting on a hilltop near the forest where World War II allies gave Germany its post-war sovereignty.

Although officials did not mention the dangers of inflation in their statements, the combination of rising inflation, stagnant growth and rising unemployment is mainly seen in the discussion, as Lindner and his US counterpart, Treasury Secretary Janet Yellen have already explained.

Fine balance

The central bank and governments are seeking a fine balance between inflation control policies and those that encourage activity. Misleading it could lead to a painful combination of high unemployment, slower economic expansion and even more severe inflation, which has wreaked havoc on markets in recent days.

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In the United States, the Federal Reserve has already begun hiking rates, and Chairman Jerome Powell has said he will continue to raise them until there is “clear and credible” evidence that inflation has receded. At a slower pace, European Central Bank policymakers are raising the flag they will soon raise.

“We can move forward slowly, raising interest rates next month,” Ignacio Visco, governor of the Bank of Italy, was one of the participants in the G-7, Bloomberg Television reported Friday. Although early June, “We’ll leave after that – after that, I mean probably July.”

Yellen told reporters Thursday that it was “predictable that there could be a soft landing” but that “both skill and luck” were needed to avoid a recession.

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What he and his colleagues are aware of is the financial consequences of ongoing support for a sustainable economy by public finance. Which is also revealed in the statement.

“The necessary financial response also leads to higher levels of public debt,” the G-7 said. “We are committed to a combination of a stable- and growth-oriented medium-term macroeconomic policy that leads us to a clear path to the medium-term sustainability of public finance and a resilient financial sector.”

Other items featuring Communic include the following:

Ukraine has pledged $ 19.8 billion in budget assistance this year – read the full story Here is the G-7’s “strong political commitment” to change the global tax system and work on new rules to improve the general framework for restructuring developing and emerging debtors Country, the ministers said

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