IMF warns UK & US vulnerable to inflation hike

The International Monetary Fund (IMF) has today warned that an inflationary shock could stifle the UK economy.

The IMF is a global financial institution that provides loans to developing and transition economies.

It said that the UK, US and some emerging markets are especially vulnerable to long-term and large price rises.

They said central bankers must to be prepared to issue higher rates if inflation rockets, even if it means a slower return to a pre-pandemic labour market.

Its recent World Economic Outlook report also said the British economy will grow by 6.8 per cent this year, down 0.2 percentage points from their July forecast, and around 0.2 percentage points faster next year at 5 per cent.

The fund said it thought inflation would return to pre-pandemic levels midway through 2022, but said “considerable” international variation was likely.