BENGALURU, India – Inflation in the United States has not “turned the corner yet” and it is too early for the Federal Reserve to declare victory in the fight on rising prices, a top International Monetary Fund (IMF) official said in an interview with the Financial Times on Thursday.

Dr Gita Gopinath, a deputy managing director of the fund, urged the US central bank to press ahead with rate rises in 2023.

She said it was important for the Fed to “maintain restrictive monetary policy” until a “very definite, durable decline in inflation” was evident in wages and industries not related to food or energy.

“If you see the indicators in the labour market and if you look at very sticky components of inflation like services inflation, I think it’s clear that we haven’t turned the corner yet on inflation,” she told the newspaper.

The comments follow data on Wednesday showing that job openings, closely watched as a proxy for labour market shortages and pressure on employers to hand out wage increases higher than normal, fell only moderately in November in the US.

Minutes of the Fed’s Dec 13 to 14 policy meeting that were published on Wednesday showed that officials agreed the central bank would now need to balance its fight against price pressures with the risks of slowing the economy too much.

But the minutes added: “No participants anticipated that it would be appropriate to begin reducing the federal funds rate target in 2023.”

While the Fed had slowed its pace of rate increases in December after several steep rate rises, the latest report shows that officials were also concerned about any “misperception” of their moves.

The officials warned that an “unwarranted” easing of financial conditions, especially if driven by public misperceptions, would complicate efforts to restore price stability.

Last October, the IMF cut its outlook for global economic growth in 2023, reflecting the continuing drag from the Ukraine war as well as inflation pressures and high interest rates engineered by central banks to rein in those price pressures.

In the interview, Dr Gopinath added that she expected China’s economy to suffer significantly in the near term. A rebound is possible later in 2023, however, as Chinese demand recovers, the report quoted her as saying. REUTERS