Central Banks

ECB and BOE Should Tread Carefully With Rate Hikes, IMF Says

Washington fund warns ‘financial stress can surface abruptly’
Report says tightening is needed until core inflation subsides

WATCH: IMF’s Alfred Kammer says tight monetary policy is still needed in Europe. He also discusses the IMF’s view on the UK.Source: Bloomberg

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By Craig Stirling

April 28, 2023 at 6:00 AM UTC

This article is for subscribers only.

Europe’s central banks should be wary of potential dangers ranging from more financial stress to a divergence in bond yields as they stay the course with further interest-rate hikes, according to the International Monetary Fund.

Inflation risks put the onus on officials to keep tightening, the Washington-based lender said in a report on Friday. Even so, they’ll need to stay nimble in case more tensions emerge similar to the recent turmoil originating in the US that ended up crippling Credit Suisse Group AG.