The IMF is predicting more pain for global stocks as central banks around the world tighten their monetary policies.The Fed on Wednesday indicated hawkish plans for rate hikes this year to tame inflation.The International Monetary Fund is predicting more pain for global stocks as central banks around the world tighten their monetary policies to curb rising inflation.
Less accommodative policies would come as the global economy enters 2022 in a"weaker position than previously expected" on the back of a still ravaging Covid-19 pandemic, the IMF warned in a"We could certainly see further tightening of financial conditions, and that means that risk assets such as equities could sell off further," Tobias Adrian, the IMF's financial counselor and director of monetary and capital markets, toldOn Wednesday, the Federal Reserve indicated...
In the press conference that followed, Chair Jerome Powell acknowledged that inflation may stay high for longer than expected and admitted that a rate hike at every meeting of the Federal Open Market Committee this year is not off the table. US stocks quickly gave up steep gains and finished mostly lower.
"This is hopefully not going to be disorderly, but it's going to be an orderly adjustment in terms of valuations," the IMF's Adrian told CNBC, adding that the reaction of the markets will largely depend on the central bank's clarity. He also said an unexpected tightening of, for instance, 50 basis points, could spark a"substantial" sell-off. This pressure will likely spill over to the digital asset space, he said, which has exhibited high correlations with traditional financial markets.