Rising inflation, particularly in the United States, is among the risks facing the global economy amid a “worsening two-track recovery,” the International Monetary Fund warned on Wednesday.
“There is a risk of a more sustained rise in inflation or inflation expectations, which could potentially require an earlier-than-expected tightening of U.S. monetary policy,” Kristalina Georgieva, the I.M.F. managing director, wrote in a blog post.
The I.M.F., which is based in Washington, forecasts the United States economy to grow 7 percent this year, the fastest pace since 1984, and said that although this speedy recovery could benefit many other countries by increasing trade, there is the risk that it could raise the inflation rate, leading to other problems.
Higher interest rates could lead to a “sharp tightening” of financial conditions around the world and “significant capital outflows” from emerging economies, she wrote….