LONDON: The International Monetary Fund will warn the US Federal Reserve this week that it needs to prepare the world economy for higher interest rates, the Financial Times reported yesterday, after obtaining a draft chapter of a key IMF report.
While noting that the US has leeway, the IMF will warn in its latest world economic outlook that the ground should continue to be prepared for future monetary tightening, the FT said. A key challenge for central banks will be to communicate their intentions as clearly as possible to the markets, thereby reducing the risk of abrupt changes in expectations later on.