G7 finance ministers and central bank governors have pledged not to provide too much fiscal support as the Iran war raises the risk of slowing global growth and accelerating inflation.
The leaders noted that global economic uncertainty is increasing risks to growth and inflation, particularly through pressure on energy, food and fertilizer supply chains, as wars in the Middle East continue, and pledged to “cooperate on a political response that is temporary and targeted, and characterized by fiscal responsibility to protect growth, support economic security and strengthen resilience.”
Bond market volatility
In a final statement released in Paris today after a meeting that was dominated by fluctuations in government bond markets in many of the group’s member countries, officials pledged to follow a balanced approach that would not burden public finances.
The meeting of finance ministers and central bank governors, which began yesterday, comes as investor concerns about rising inflation due to the Strait of Hormuz energy supply crisis have pushed up bond yields across the G7 countries. The yield on the 30-year U.S. Treasury bond is nearing its highest level since 2007.
price stability
Given this atmosphere, the group sought to reassure investors that policymakers would not lose sight of their priorities, even though none of the participants had raised interest rates since the outbreak of war.
“The central bank is strongly committed to maintaining price stability and ensuring the continued soundness of the financial system,” the final statement said. The statement added: “Monetary policy will continue to rely on data as the central bank closely monitors the impact of energy and other commodity price pressures on inflation, inflation expectations and economic activity.”
G7 finance ministers and central bank governors have pledged not to extend financial support too much as the Iran war raises the risk of slowing global growth and rising inflation.
The leaders noted that global economic uncertainty is increasing risks to growth and inflation, particularly through pressure on energy, food and fertilizer supply chains, as the war in the Middle East continues, and pledged to “work together on temporary, targeted and fiscally responsible policy responses to protect growth, support economic security and strengthen resilience.”
Bond market volatility
In a closing statement released today in Paris after a meeting overshadowed by volatility in several member countries’ sovereign debt markets, officials pledged to adopt a balanced approach that would not put a strain on public finances.
The meeting of finance ministers and central bank governors, which began yesterday, comes as investor concerns about rising inflation due to the Strait of Hormuz energy crisis are leading to a rise in bond yields across the G7 countries. The yield on the 30-year U.S. Treasury bond is nearing its highest level since 2007.
price stability
In this atmosphere, the group sought to reassure investors that policymakers would not overlook priorities, even though none of the participants had raised interest rates since the outbreak of the war.
“The central bank remains firmly committed to maintaining price stability and ensuring the continued robustness of the financial system,” the final statement said. “Monetary policy will continue to rely on data, as the central bank closely monitors the impact of energy and other commodity price pressures on inflation, inflation expectations and economic activity,” the statement added.
