Central banks should avoid reacting too strongly to headline inflation – IMF

“Where the post-pandemic inflation episode may have weakened confidence in the monetary policy framework, central banks should be quicker to respond to signs of such feedback from inflation to expectations or stronger pass-through.

Central Banks worldwide are engrossed with inflation targeting policy to address rising inflation.

The International Monetary Fund has urged central banks to avoid reacting too strongly to high-frequency movements in headline inflation, particularly when those movements are driven by volatile energy prices.