The International Monetary Fund (IMF) has warned of continuous market sell-offs as central banks try to curb increasing inflation.
Market players have expected an economic recovery after easing Covid-19 restrictions. Nonetheless, the unexpected Russian-Ukrainian conflict put the world in mayhem — worsening supply chain problems and hiking energy prices.
“There is certainly a risk of further sell-offs,” Tobias Adrian, director for monetary and capital markets at the IMF, told CNBC Tuesday.
“The intended consequences of monetary tightening is to tighten financial conditions to slow down economic activity and I would not be surprised if we were to see a certain amount of readjustment of asset valuations going forward and that could be in equity markets as well as in corporate bond markets and sovereign markets,” he added.
The U.S. Federal Reserve expects to hike interest rates six more times in 2022, while the European Central Bank confirmed last week it is ending its asset purchase program in the third quarter.