Given the “uncharted nature” of the recovery from the coronavirus pandemic, “considerable uncertainty remains," the fund warns.
The Fed's monthly purchases of government-backed bonds to prop up the economy "still have a use, but it’s time for us to begin to taper them."
"A premature and abrupt withdrawal of policy support should be avoided whilst the near-term outlook is still uncertain.”
Experts may call consumer price increases 'transitory,' but fighting rising costs has become a priority for finance chiefs.
The Fed chair confirmed officials are moving toward winding down the monthly bond-buying program but was not specific about timing.
"Uncertainty remains high" and "central banks may need to take preemptive action," the Fund warns in its latest World Economic Outlook.
"The pandemic continues to cast a shadow, especially as the Delta variant constitutes a growing source of uncertainty."
Some companies are taking aggressive action to pass on at least some of the abnormal cost increases to customers.
"June’s big inflation number will ramp up scrutiny of price-related data as policymakers assess whether the economy is at greater risk of overheating."
It is still "appropriate to maintain" near-zero interest rates even though inflation "has increased notably this spring."
“This is likely a shift in market narrative: away from inflation concerns to concerns about the sustainability of growth momentum."
"Temporary is going to be a little longer than we expected initially ... Rather than it being two to three months it may be six to nine months."
