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Rapid rise in rates can trigger economic disorder, IMF Warns

IMF warned that investors could continue to pull back from global markets!

Global central banks’ moves to raise interest rates at the fastest pace in more than 40 years are fueling increased risks to the financial system, the International Monetary Fund warned

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Statista Chart on IMF projections

Deteriorating market liquidity, or the ability to easily buy or sell an asset, could combine with elevated financial vulnerabilities, fueled by years of low-interest rates and cheap credit, to amplify future shocks, the IMF said in the latest update to its semiannual Global Financial Stability Report.

  • The report comes as concerns about financial stability bubble up in the U.K.

“There is a risk of a disorderly tightening in financial conditions,” the fund said, warning that investors could continue to pull back from global markets “if inflationary pressures do not abate as quickly as currently anticipated or the economic slowdown intensifies.”