the stimulus plan promulgated this Thursday by the President of the United States, Joe Biden, per $ 1.9 trillion, Could significantly boost the global economy, he said on Thursday International Monetary Fund, But they exist risks of a rise in interest rates and inflation.
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Although the “US Rescue Plan” seems to be the best solution to the financial crisis that affected the world’s largest economy with a contraction of 3.5% in 2020, the IMF referred to risks which has the ambitious project for the rest of the world.
“We see potentially significant repercussions for global growth”, Said in a virtual press conference the spokesman for the International Monetary Fund (IMF), Gerry Rice. Most countries should benefit from “stronger U.S. demand,” he added.
But “we have to be attentive at threats and countries must remain vigilant and alert to any potential risks, including the possibility of sudden changes in interest rates“, Said the spokesman for the Fund.
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Risks for emerging countries
Financial markets fear that the exit from the crisis caused by the pandemic will encourage 1 recovery with inflation which leads to the Federal Reserve (Fed, US central bank) raise the reference interest rates earlier than expected to contain the momentum in prices.
The head of the Fed, Jerome Powell, Has repeatedly rejected this possibility and argues that there could be one temporary inflation. According to the IMF, the Federal Reserve and other central banks must continue to communicate in a “clear way, as they have been doing.” assessments of the economy.
A sharp rise in interest rates in developed countries can impact the costs of debt refinancing of emerging nations.
It is a risk among so many others that we will be watching
The rescue driven and enacted by Biden will join that of 900 billion dollars that Congress pushed in December and the 2.2 trillion of dollars, the largest in country history, in March 2020, under the presidency of the Republican Donald Trump.
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The ghost of inflation
Despite the promises of unity in the face of the common challenge of the pandemic, The truth is that the new bailout has come forward in Congress without a single support from the republican oppositionBy contrast, senators from this party have made public their concern about the latent risks of the package.
Even before the vote on the stimulus plan, several voices were raised economists who warned that inject massively money in the US economy with a recovery underway could generate a reheating.
Although most experts – including the IMF chief economist Gita Gopinath– estimate that if there is an increase in prices above the 2% limit set by the Federal Reserve, it would be temporary.
With a majority in the lower house, President Joe Biden’s bill was passed last Wednesday.
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What does the Biden government respond to?
However, the government has assured that knows the risk, And that the priority is to launch this incentive program to appease 1 crisis which still drowns many homes.
“It’s a risk among so many others that we will be watching”, The White House economic adviser said on Thursday, Brian Deese, On CNN.
Deese indicated that checks for $ 1,400 for lower-income families would begin to be sent this month. The Biden government wants to “see a strong and robust growth this year and is what we need to quickly return to full employment and get out of the very serious situation in which we find ourselves, “he concluded.
For the US economy, the IMF calculated in January expansion of 5.1% of GDP in 2021. The entity will update its forecasts on the global economy on April 6, At the beginning of the half-yearly meeting, in a report in which their forecasts are likely to be reviewed al raises.
INTERNATIONAL WRITING *
* With AFP and Efe
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