G-7 Pledges Greater Policy Cooperation As Risks Mount, Draft Communique Says
The Group of Seven aims to enhance macro policy cooperation in an effort to address a further slowdown in the global recovery.
(Bloomberg) -- The Group of Seven aims to enhance policy cooperation in an effort to address a further slowdown in the global economic recovery as risks continue to mount, according to a draft communique.
The G-7 also pledged to preserve financial stability, and said it’s important for regulators to remain vigilant to guard against rising systemic risks as financial conditions tighten, according the draft, a copy of which was obtained by Bloomberg. The group also noted that policies to support sustainable economic recoveries will need to pay due consideration to country-specific circumstances.
The draft was circulated among participants Wednesday morning ahead of the gathering in Washington of G-7 central bank governors and finance ministers.
In a nod to a surging US dollar, the draft recognized that many currencies have moved significantly with increased volatility. The draft said the G-7 reaffirmed its April 2021 exchange-rate commitments, a reference to a prior communique.
April 2021 G-7 exchange-rate language:
“We remain committed that our exchange rates reflect underlying economic fundamentals and note that exchange rate flexibility can facilitate the adjustment of our economies. We will continue to consult closely on foreign exchange market developments. We recognize that excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will refrain from competitive devaluations and will not target our exchange rates for competitive purposes.”
Wednesday’s draft called for agile and flexible fiscal measures, and endorsed temporary and targeted policies to help sustain the purchasing power of those worst affected by surging energy and food costs. Any such moves should be well designed to avoid adding to already-high inflationary pressures.
Central banks have tightened monetary policy in response to higher-than-expected and persistent inflation, the draft noted. Russia’s war against Ukraine has also sparked negative economic spillovers, besides the massive humanitarian cost, it said.
G-7 finance chiefs are strongly concerned about a global food crisis, with the risk of famine for some nations, the draft said. The seven members vowed to consider all tools necessary to address acute food shortages, it said.
(Updates with context on exchange-rate commitments, and further draft language throughout.)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.