Tighter monetary policies may be needed for a longer period: IMF

Central banks may need to keep monetary policies tighter for a longer period due to high inflation rates in many advanced countries, the International Monetary Fund (IMF) said in its Global Financial Stability Report's October edition on Tuesday.

"Yet, optimism about a 'soft landing' of the global economy, whereby disinflation continues apace and a recession is avoided, has eased financial conditions," the IMF said, adding that stock markets have rallied, credit spreads have remained tight, and emerging market currencies have appreciated.

It said that the global credit cycle has started to turn as borrowers' debt repayment capacity diminishes and credit growth slows. "Risks to global growth are therefore skewed to the downside, similar to the assessment in April."

From September 2021 to August 2023, central banks of advanced economies raised interest rates by 400 basis points on average, while those in emerging markets hiked 780 basis points, according to the report.