G20 to avoid 'premature withdrawal' of economic support

G20 pledges to avoid 'premature withdrawal' of economic support

While the global recovery has been solid, the statement notes that it has been 'highly divergent' among countries

 Representative image. Credit: iStock Photo

Finance ministers from the Group of 20 economies on Wednesday pledged to keep economic stimulus policies in place to ensure a recovery from the Covid-19 pandemic.

Amid ongoing risks, "We will continue to sustain the recovery, avoiding any premature withdrawal of support measures," according to the official communique released after the G20 meeting.

While the global recovery has been solid, the statement notes that it has been "highly divergent" among countries.

"We reaffirm our resolve to use all available tools for as long as required to address the adverse consequences of Covid-19, in particular on those most impacted," the statement said.

At the same time, officials are "closely" watching rising prices, the statement said.

The meeting of finance ministers and central bank governors is being held at a time when suppliers are struggling to meet renewed demand and bottlenecks are causing shortages of key materials and pushing prices higher.

Oil prices, notably, have spiked above $80 a barrel for the first time in years.

Italy's central bank chief Ignazio Visco agreed with the IMF and others who have said the inflation pressures are mostly due to transitory factors like the surge in demand.

But he acknowleded that "these may take months before fading away."

G20 central bankers are studying the issue to see if there are "more structural factors at work" in the bigger-than-expected inflation spike, and "whether there is some component which starts being transitory but that could become permanent," Visco told reporters.

Central bankers are walking a fine line between supporting the recovery with easy financial conditions while warding off a permanent increase in inflation.

The communique said central banks "will act as needed to meet their mandates, including price stability, while looking through inflation pressures where they are transitory."

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