The International Monetary Fund said, today, Tuesday, that the continuous support for monetary and financial policies has contributed to containing the risks of financial stability so far, in light of the world continuing to confront the “pandemic-19.”
Despite this continued support globally, in recent months investors have become increasingly concerned about the economic outlook amid rising virus infections and increasing uncertainty about the strength of the recovery.
The report added that financial conditions have eased further since the Global Financial Stability Report in April 2021, supported by expectations that monetary policy will remain loose. Despite some recent turmoil, stock prices have soared and credit spreads have continued to shrink, in general, resulting in extended valuations in financial market sectors.
He pointed out that despite the emergence of some improvement during the recovery period, there are still high financial vulnerabilities in a number of sectors.
The report indicated that credit conditions have improved in the corporate sector, but unevenly, and banks have played a critical role in supporting the flow of credit to the economy during the pandemic, but standards for guaranteeing bank loans are still restricted in many countries.
The Fund stressed that monetary and fiscal policy support will remain a key factor in maintaining the continued economic recovery, but it should be more targeted and adaptive to the country’s conditions due to the varying pace of recovery across countries.
The Fund noted the need for central banks to provide clear guidance on the future position of fiscal policy to avoid an unjustified tightening of financial conditions.
He added that if price pressures are more persistent than expected, monetary authorities should act decisively to prevent inflation expectations from worsening, and fiscal support should shift to more targeted measures and be tailored to the country’s characteristics.
She noted that policy makers must take early action and tighten the macroprudential tools selected to target pockets of high vulnerabilities.
The report stressed the need for emerging markets to implement structural reforms; These countries remain at risk of a sudden tightening of external financial conditions.
The article International Monetary: International support measures contributed to containing the risks of financial stability in the face of “Corona” was written in Al Borsa newspaper.