IMF: Rising crude oil prices will worsen inflation

The International Monetary Fund (IMF) released a report on Sunday, citing the impact of rising oil prices might on inflation global inflation and growth outlook.

Key takeaways

“For some, rising oil prices may echo the 1970s when geopolitical tensions also caused fossil fuel prices to spike.”

“Memories of the high inflation and slow growth that followed—known as stagflation—have fueled concerns about a possible repeat. Importantly, though, times have changed.”

“Central banks, too, have changed since the 1970s. More are independent today, and the credibility of monetary policy has broadly strengthened over the intervening decades.”

“We expect global growth to be close to the pre-pandemic average of 3.5 percent, even after our April World Economic Outlook lowered projections, but it still could slow more than forecast, and inflation could turn out higher than expected.”

“This may be most salient for parts of Europe, given their relatively higher reliance on Russian energy imports.”

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