IMF chief warns of multiple inflationary shocks amid market jitters

theguardian.com:

Global finance leaders should prepare for multiple inflationary shocks, the head of the International Monetary Fund has warned, as fears of a global economic downturn continue to hit markets around the world.

The IMF’s managing director, Kristalina Georgieva, said it is becoming harder for central banks to bring down inflation without causing recessions.

Speaking at the sidelines of a meeting of G7 finance ministers and central bank chiefs in Germany, Georgieva cited mounting pressures on energy and food prices from Russia’s war in Ukraine, supply chain disruption and cost pressures caused by China’s zero-Covid policies.

“I think what we need to start getting more comfortable with is, that may not be the last shock,” Georgieva said, adding that the outbreak of the Omicron coronavirus variant late last year had shown that inflation would not be a “transitory” one time shock.

Inflation has risen to its highest level in about 40 years in both the UK and the US this year, and is the highest it’s been in the eurozone since statistics began in 1997.

Investors fear that central banks risk a “hard landing”, pushing economies into recession, as they raise interest rates to bring inflation down towards target.

London’s stock market tumbled into the red on Thursday, with the FTSE 100 index down 146 points or 2% in afternoon trading at 7,292.

The pan-European Stoxx 600 index was down 1.3% with personal care companies, food and beverage companies, tech stocks and retailers all weakening.

Wall Street opened lower, a day after its worst selloff in nearly two years, as major retailers reported that rising inflation was hitting consumer spending and eating into their profit margins.

US department store chain Kohl’s slashed its profit and sales