Economic Buzz: UKs Economic Recovery Faster Than Expected Says IMF, Near-term Outlook Remains Strong

23 Feb 2022 , 05:10 PM

The International Monetary Fund (IMF), stated in a latest update that thanks to a rapid vaccination campaign and highly accommodative policies, the United Kingdoms economic recovery has proceeded faster than expected. The near-term growth outlook remains strong?but so too are inflationary pressures. Monetary policy will need to tighten steadily to anchor inflation expectations and bring inflation back to target. Careful communication to counter expectations of a long cycle of rate hikes and high borrowing costs would help reduce the drag on growth in 2023. Fiscal policy could support this tightening cycle if planned consolidation was brought forward slightly. The fund noted that the financial system has been resilient. Corporate and household balance sheets have held up well, but the resilience of non-bank financial institutions and core financial markets could be better underpinned.

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