The Managing Director of the International Monetary Fund on Thursday called on the United Kingdom and other states to adopt “coherent and consistent” policies, in response to a question about the British mini-budget which has led to a movement of defiance in recent weeks. in the financial markets.
I had a very constructive meeting with British Chancellor of the Exchequer Kwasi Kwarteng and the Governor of the Bank of England, Kristalina Georgieva said during a Washington press conference, adding that she had discussed the importance of consistency and clear communication so that there is no additional instability in an already unstable environment.
The new government in place in the United Kingdom has provoked a movement of defiance in the markets in recent weeks by adopting a mini-budget which included a massive support plan for activity as well as tax reductions, in particular for the wealthiest, while providing for a very significant recourse to borrowing.
This fiscal package sent the pound plunging and borrowing rates skyrocketing on fears of fiscal slippage and further soaring inflation just as the Bank of England tries to reduce the soaring prices.
London begs to review its copy
The IMF then asked London to quickly review its copy in a statement in an unusually direct tone for a rich country.
Our message to everyone, not just the UK, is that fiscal policy should not clash with monetary policy at this time, Georgieva continued Thursday at the IMF’s autumn meeting. calling to ensure that the policies are coherent and consistent.
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If the two policies clash, then the task of central bankers only becomes more difficult and translates into the need for more rate hikes, she said, urging not to prolong the pain.
According to information from Bloomberg on Thursday, an about-face is being studied in the offices of the British Prime Minister as in those of the Chancellery, but no decision has yet been taken.
I believe it is okay to have action guided by evidence, so if the evidence shows that there needs to be a recalibration, it is good for governments to do it, Ms Georgieva said again.