At the press conference of the latest "Global Economic Outlook Report" of the International Monetary Fund (IMF), IMF Chief Economist Gita Gopinath answered a question from a reporter from China Business News on the impact of the Fed's interest rate hike on emerging markets , warned that as the world's major central banks began to raise interest rates, global interest rates will enter a period of rising, which may bring obstacles to the recovery of some emerging market and developing economies.

  Gopinath further explained: “It’s impossible to generalize on this issue.

For those emerging market and developing economies with large foreign reserves and less reliance on foreign currency debt, the situation is much better.

By contrast, those Emerging market economies that rely more on short-term foreign currency borrowing and do not have sufficient foreign exchange reserves are more vulnerable to market volatility.”

  When talking about the impact of the Fed's rate hike on the Chinese market,

Gopinath praised that China's economic recovery has been in the advanced stage

.

At the same time, the recovery pace of China's private consumption has not been as expected, and the real estate industry is also facing challenges.

  "In my opinion, factors such as the epidemic prevention and control situation and the real estate industry will continue to be the main variables in the IMF's baseline forecast of China's economic outlook." She also pointed out, "Of course, once the global financial system generally tightens, all Countries will be affected, including China."

  The IMF recommends that emerging market and developing economies with large foreign currency borrowing and external financing needs should extend debt maturities where feasible and control currency mismatches to prepare for possible financial market volatility.

The Fed needs to clearly communicate monetary policy to help the market pull back in an orderly manner

  Gopinath said that in view of the strength of the U.S. economic recovery and the inflationary pressure it faces, it is indeed necessary to withdraw from the ultra-easy monetary policy.

  In the early morning of Thursday, Beijing time, the Fed's first monetary policy meeting of the year ended.

The Fed is widely expected to further signal its first rate hike in more than three years in March and provide more information for a later balance sheet reduction.

  Of course, there is still a lot of uncertainty about the rate hike process.

The probability of a 100 basis-point rate hike in 2022 climbed to 67.1 percent as of Jan. 25, according to the CME Group's FedWatch tool.

Just a month ago, that forecast was still less than 35%.

  "How much will interest rates rise? Need interest rate stimulus? Combined with the tense geopolitical situation in many places around the world, all of this will affect the market trend." Gopinath pointed out, "We previously mentioned in the "Global Financial Stability Report" that , multiple aspects of the capital market have been overvalued. It can be expected that the market will experience a correction as interest rates rise.”

  Recently, concerns about the Federal Reserve's accelerated withdrawal from its loose monetary policy have hit major U.S. stock indexes hard, with the Nasdaq represented by technology stocks bearing the brunt of the losses. It has fallen 14.5% over the past month, taking the lead in falling into a correction range.

Over the same period, the Dow and S&P 500 fell 5.2% and 8.8%, respectively.

  With the pace of the Fed meeting approaching, coupled with the turbulent geopolitical situation, the turmoil in US stocks has intensified.

On Monday, the Dow "counterattacked" a thousand-point drop and closed higher, and the Nasdaq recorded its largest one-day reversal record since 2008.

  Goldman Sachs strategist Christian Mueller-Glissmann warned that a “rate hike shock” could trigger a “growth shock” if the Federal Reserve tightened monetary policy sharply to curb inflation.

"Given that the U.S. is facing the biggest inflationary pressure since the 1980s, that risk is increasing," he said.

  To this end, the

IMF emphasized that the Federal Reserve needs to communicate more clearly the policy path and the rationale for its actions in the process of adjusting monetary policy to help the market achieve a more orderly correction.

Downgrade forecast for global economic growth

  According to the latest "Global Economic Outlook Report" released by the IMF on the 25th, the global economic growth rate may fall to 4.4% this year, down 0.5 percentage points from the forecast in October last year.

Among them, the growth forecasts for developed economies and developing economies this year are 3.9% and 4.8%, respectively, down 0.6 and 0.3 percentage points from the previous value.

  The IMF warned that the sustained recovery of the global economy is facing multiple challenges and economic growth has slowed due to multiple factors such as supply chain shortages, rising inflation, record levels of debt, and persistent uncertainty.

  鉴于美国国会通过《重建美好未来》法案(Build Back Better)一揽子财政措施的可能性下降,加之奥密克戎毒株肆虐、美联储提前退出货币宽松政策,和持续的供应链短缺等的因素拖累,IMF将今年美国经济增速预测大幅下调1.2个百分点,至4%。

  IMF官员表示,常规化货币政策和供应链短缺拖累经济成长共计0.8个百分点。

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