The International Monetary Fund warned Tuesday that pressure on central banks could harm efforts to keep inflation expectations steady, putting economies at risk of financial, monetary, and macroeconomic instability.
In its latest World Economic Outlook update, the IMF said the current environment of trade tensions and tariff uncertainty increases the need for strong policies and central bank independence. The report also pointed to the importance of clear communication from monetary authorities and the ability of central banks to act without outside influence.
The IMF said temporary measures like foreign exchange intervention or capital controls might be appropriate if tariffs cause disruptions in currency markets or risk premiums.
The comments come as U.S. President Donald Trump continues to criticize the Federal Reserve and its chair, Jerome Powell, whose term ends in May 2026. Trump has pushed for interest rate cuts and recently clashed with Powell over the cost of a Fed building project.
The IMF did not mention the Fed directly but emphasized the broader need for central banks to remain independent.
IMF Chief Economist Pierre-Olivier Gourinchas said that maintaining the public’s trust in central banks is essential. He warned that if people lose confidence in monetary policy, inflation expectations could rise, leading to higher wages, faster price increases, and rising interest rates, eventually forcing economies into a downturn.
He said the belief that monetary authorities are in control has kept inflation expectations stable despite high prices in recent years. Undermining that trust, he added, could make inflation harder to manage and hurt economic stability in both advanced and emerging markets.
