IMF Warns Russia on Overheating Risk

August 2, 2012 Share Print 0

Russia needs to adopt both a tougher budget and tighter monetary policy to guard against the risk of overheating and to bear down on inflation, the International Monetary Fund said in a statement on Thursday.

The statement follows a meeting of the IMF’s Executive Board to discuss the results of annual consultations between the Fund and the Russian government.

IMF directors “recommended an ambitious fiscal consolidation path to reduce overheating pressures and vulnerabilities and ensure intergenerational equity,” it said.

They also “generally recommended a gradual further tightening of monetary policy to contain underlying pressures and anchor expectations.”

The IMF has warned repeatedly in recent months that it fears Russia’s economy is in danger of overheating – implying that demand is growing faster than potential output, leading to higher inflation.

via Reuters

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Alfonso Esparza

Senior Currency Analyst at Market Pulse

Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.