By David Lawder and Andrea Shalalp
WASHINGTON Reuters – The International Monetary Funds new chief economist said on Tuesday he is concerned about increasing signals that inflation expectations are on the rise and may become entrenched at elevated levels, prompting more aggressive monetary policy tightening in advanced economies.
PierreOlivier Gourinchas, who started transitioning to the IMFs economic counsellor role in January, told Reuters in an interview that the war in Ukraine, which is causing energy and food prices to spike, may damage expectations for decadeshigh inflation to start to subside this year.
A “very, very tight labor market” in the United States is increasing demands for wage increases to “catch up” with higher prices that could help entrench inflationary expectations, the Frenchborn former University of CaliforniaBerkeley economist said.
