A top official at the IMF has warned of “acute” risks to the global financial system and said weaker banks face further pressure if central banks continue ratcheting up rates to squash inflation.
In an interview with the Financial Times, Tobias Adrian, director of the fund’s monetary and capital markets department, struck a downbeat tone in the wake of the worst bout of banking turmoil since the global financial crisis. Last month, three US banks failed while Credit Suisse was forced to sell to UBS.
The IMF is worried that inflation will not decline as rapidly as expected this year, forcing central banks to tighten monetary policy even further and unmasking new weaknesses in the financial system.