According to the International Monetary Fund, if supply chain disruptions continue or inflation expectations become de-anchored, inflation could "become more sticky" in some parts of the world.
Inflation is expected to fall in the United States, the world's largest economy, in 2022, but policymakers should be cautious given the risks, according to IMF spokesman Gerry Rice at a regular briefing.
“Continued high levels of U.S. inflation may necessitate a more front-loaded policy response, which would pose a systemic downside for both the U.S. and the global economy,” he said.
Rice said inflation expectations were generally anchored in most economies, adding, “But if the supply disruptions continue or inflation expectations become de-anchored, inflation may become more sticky.”
He stated that central banks must "stay vigilant" against inflationary pressures and that the IMF is working through scenarios on monetary and fiscal policy, including the effects of monetary tightening in advanced economies on emerging economies.
According to New York Federal Reserve Bank President John Williams, inflation in the United States is becoming more broad-based, and expectations for future price increases are rising, a trend policymakers will be watching closely.
Rice noted that natural gas prices had reached record levels in some parts of the world, but the IMF predicted that energy prices would return to more normal levels over the course of next year as heating demand ebbed and supplies adjusted.
He had no immediate comment on the Biden administration's request that some of the world's largest oil-consuming nations, including China and Japan, consider releasing some of their crude reserves in a coordinated effort to lower prices and stimulate economic recovery.