G20 pledges to calibrate pace of interest rate hikes, limit spillovers
In a joint declaration, world leaders also express their resolve to limit the rise in global temperatures to 1.5 deg C
[NUSA DUA, BALI] Leaders of the G20 said on Wednesday (Nov 16) that their central banks will continue to calibrate the pace of monetary policy tightening, and to do so in a way that limits “cross-country spillovers”.
In a joint declaration issued at the end of their two-day summit on this Indonesian resort island, the leaders also reaffirmed their commitment to avoiding excessive exchange-rate volatility, even as they recognised that “many currencies have moved significantly” this year.
The statement said: “G20 central banks ... are monitoring the impact of price pressures on inflation expectations and will continue to appropriately calibrate the pace of monetary policy tightening in a data-dependent and clearly communicated manner.”
The central banks’ recognition of the need to limit spillovers arises from concern among several emerging economies over the US Federal Reserve’s aggressive interest rate hikes this year, and the impact these could have on their respective markets.
“Central bank independence is crucial to achieving these goals and buttressing monetary policy credibility,” the statement said.
“Countries must take temporary and targeted measures to sustain the purchasing power of the most vulnerable, (and) cushion the impact of commodity price increases.”
On debt, the leaders expressed concern about the “deteriorating” situation of some middle-income countries. No specific countries were named, but the statement stressed the importance of all creditors sharing the burden equally.
On the issue of climate change, the G20 leaders expressed their resolve to limit the rise in global temperatures to 1.5 deg C; they agreed that doing so would require “meaningful and effective actions and commitment” by all countries.
“Mindful of our leadership role, we reaffirm our steadfast commitments in pursuit of the objective of UNFCCC (United Nations Framework Convention on Climate Change) to tackle climate change by strengthening the full and effective implementation of the Paris Agreement and its temperature goal,” they said in the joint declaration.
The message they sent to the delegates and officials at the ongoing COP27 conference in Egypt was to “urgently scale up” their efforts to cushion the effects of, and to adapt to, climate change.
The statement also noted the need to accelerate “efforts towards the phase-down of unabated coal power” in line with national circumstances, and to recognise the need for support towards just transitions.
On the sidelines of the G20 summit on Tuesday, US President Joe Biden and Indonesian President Joko Widodo announced a new US$20 billion climate finance deal, known as the Just Energy Transition Partnership, to help Indonesia ramp up its efforts to wean itself off coal power.
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