IMF urges Asia to be more aware of spillover risks

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TOKYO – Asian economies must be aware of spillover risks as major central banks’ decades-old unconventional easing policies have been withdrawn faster than expected, said Kenji Okamura, deputy managing director of the International Monetary Fund (IMF).

This risk applies especially to the weakest economies, Okamura said, without naming them.

He said Asian economies have faced a choice between supporting growth with greater stimulus and withdrawing it to stabilize debt and inflation.

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Although the Bank of Japan’s policy has been in stark contrast to the global financial crisis, the central banks of the United States, Britain and Australia have recently raised interest rates.

Okamurao, a former Japanese co-finance minister for international affairs, said the Kovid-19 epidemic, the war in Ukraine and the difficult global financial situation would make this year “challenging” for Asia.

He says the war is affecting high commodity prices in Asia and slow growth in Europe.

Speaking at his first media event since becoming one of the four deputy managing directors of global lenders last year, Okamura warned of the possibility of further intensification if inflation expectations continue to “flow”.

“There is a risk that tighter tightening may be needed to anticipate flowing inflation,” he said.

Okamura called for calibrated policy and clear communication. (Reporting by Tetsushi Kajimoto; Editing by Bradley Parrett)

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