WASHINGTON (Reuters) – The International Monetary Fund’s steering committee on Thursday urged global policymakers to monitor pricing dynamics closely, but to “look through” inflationary pressures that are transitory and will fade as economies normalize.

The International Monetary and Financial Committee, made up of 24 finance ministers and central bank governors from IMF member countries, said in a final communique that governments should “carefully calibrate” domestic policies to an evolving pandemic.

“We will continue to prioritize health spending and protecting the most vulnerable, while shifting focus, as appropriate, from crisis response to promoting growth and preserving long-term fiscal sustainability,” they said.

Inflation concerns, stoked by pent-up demand, supply chain bottlenecks, higher energy and commodity prices and weather events have been a hot debate topic at IMF and World Bank annual meetings this week, and contributed to the Fund trimming its global growth outlook on Tuesday.

“Central banks are monitoring price dynamics closely and can look through inflation pressures that are transitory. They will act appropriately if risks of inflation expectations de-anchoring become concrete,” the IMFC said.

The language was toned down from an earlier draft that called for central banks to be ready to take “decisive actions to maintain price stability.”

Magdalena Andersson, the Swedish finance minister who chairs the IMF panel, told a news conference: “It’s important that we get the global value chains working better than they are today,” adding that more initiatives were needed to ease global shortages of some goods.

The IMFC also called for clear communications by policymakers to limit negative cross-country spillovers and to use macroprudential tools to limit financial vulnerabilities.

The statement noted the growing divergences between rich and poor countries in economic recovery and access to vaccines, noting that recovery risks are tilted to the downside.

RESERVES LENDING

The IMFC said it welcomed the IMF’s efforts to establish a new Resilience and Sustainability Trust to help channel a $650 billion allocation of reserve assets to provide affordable long-term financing to countries undertaking structural reforms and working to maintain balance-of-payments stability.

“The RST should preserve the reserve asset characteristics of the SDRs,” the IMFC said. “We call upon the IMF to develop and implement the RST and collaborate closely with the World Bank in this process, and to provide technical support in exploring viable options for channeling SDRs through multilateral development banks.”

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