The International Monetary Fund (IMF) on Tuesday downgraded its forecasts for global economic growth in 2022 and 2023, saying geo-events in Russia and Ukraine were spreading.

The Washington-based institution now expects the global economy to grow by 3.6 per cent GDP this year and 2023. Compared with the forecast released in January, the two figures are down 0.8 and 0.2 percentage points, respectively.

"the global economic outlook has suffered a serious setback, mainly due to the conflict between Russia and Ukraine," Pierre Olivier Gulinchas, an economic adviser to the International Monetary Fund, said in a blog post on Tuesday.

"the impact of geo-events will spread widely, increasing price pressures and exacerbating major policy challenges," Gourinchas said.

Earlier this week, the World Bank also downgraded its global economic growth forecast to 3.2% from 4.1% in 2022.

The IMF said some follow-up events would also have an impact on the Russian economy, with GDP expected to fall 8.5 per cent this year and 2.3 per cent in 2023. However, the IMF's forecast for the Ukrainian economy is more pessimistic.

In its latest economic assessment, the International Monetary Fund said that "the Ukrainian economy is expected to contract by 35% in 2022." "even if some geopolitical events are coming to an end, factors such as material capital will seriously hinder economic activity for many years to come," the agency said. "

Inflation is in danger

More broadly, the conflict between Russia and Ukraine has exacerbated the supply shock to the global economy as well as new challenges. "Russia is a major supplier of oil, gas and metals, and Ukraine is also one of the major producers of wheat and corn," Gourinchas said. The decline in the supply of these commodities has pushed their prices up sharply, "IMF said on Tuesday.

IMF expects this to hurt the interests of low-income households around the world and lead to higher inflation for longer than previously expected. The International Monetary Fund estimates that inflation will reach 7.7% in the United States and 5.3% in the euro zone this year.

"the risk of inflation expectations deviating from the central bank's inflation target is rising, prompting policymakers to take more aggressive tightening measures," IMF said.

Brad, one of the first Fed supporters of a big rate hike, does not rule out a really big rate hike, but he does not see the need to do so.

Speaking of the extent of the rate hike, James Brad, president of the Federal Reserve Bank of St. Louis, said on Monday that raising interest rates by more than 50 basis points was "not my basic expectation." But he pointed out that the Fed raised interest rates even more, and when it comes to a possible 75 basis point hike, I don't rule it out. "

Brad said the fed is pushing ahead with its tightening plan, hoping to raise the federal funds target rate to about 3.5% by the end of the year, helping to control inflation, which is currently at a 40-year high.

The Fed is expected to raise interest rates six more times in 2022, and the European Central Bank confirmed last week that it would end its asset purchases in the third quarter. However, if inflation remains high, this monetary tightening is likely to accelerate.