If the International Monetary Fund is very hawkish about emerging economy monetary policy, it is super-dovish about the same policies in developed economies. This will please the Fed, many in the Bank of England, but make difficult reading for the European Central Bank.
Fed
The Fund is very relaxed about the recent upturn in inflation and thinks the Fed and its advanced economy counterparts can “accommodate hikes in food and energy prices mainly because the weight of food and energy in the consumer basket is relatively small, people have learned from experience that such hikes do not set off a cycle of inflation, and excess capacity will exert downward pressure on wages”. The Fed will be pleased with its assessment from the Fund.
“With output still significantly below potential, inflation persistently low, and the unemployment rate stubbornly high, continued monetary accommodation is warranted.”
ECB
Jean-Claude Trichet is likely to be irritated by the IMF’s typically Anglo Saxon view that its rise in interest rates when the European economy is still weak was wrong. But the IMF did not try to hide its view Read more
Consumer price inflation has fallen back to 4 per cent in the UK, against expectations that the rate would hold steady at 
Chris Giles
Michael Steen
Robin Harding
Ralph Atkins
Claire Jones
