IMF warns on ‘last mile’ of inf lation

Rising energy prices and disruption to international shipping risk ‘‘stalling’’ declines in inflation in leading economies, the International Monetary Fund has warned, telling central banks that the ‘‘last mile’’ of their battle against price rises may be the hardest.

In its latest assessment of global financial stability, the IMF said markets were vulnerable to another round of volatility if investors continued to push back their expectations for interest rate cuts this year, leading to falls in bond and stock prices.

‘‘There is recent evidence that disinflation may have stalled in some countries and that underlying inflation may be persistent in some sectors,” Tobias Adrian, the fund’s financial counsellor, said. ‘‘In some cases, core inflation has come in higher than analysts’ forecasts for consecutive months. Higher-than-expected readings could challenge investor optimism, potentially leading to financial market repricing and higher volatility.’’

The United States has recorded two consecutive months of stubbornly high inflation, with its headline rate of prices growth accelerating to 3.4% in March, on the back of a strong economy and a burgeoning labour market.

Jerome Powell, head of the US Federal Reserve, said rates may need to stay higher for longer than previously thought, given a ‘‘lack of further progress’’ this year towards the 2% inflation target.

Inflation in the eurozone has fallen steadily to 2.4% and figures released this week are likely to show another decline in Britain’s headline consumer prices inflation from 3.4% to 3% in March.

The Bank of England thinks inflation will fall temporarily below its 2% target in April before ending the year at just above that figure.

The IMF’s warnings about a new round of inflationary pressures come amid an escalation of the conflict in the Middle East involving Iran and Israel.

Brent crude, the international oil price benchmark, has steadied over the past week despite the rising tensions between the two countries. Economists estimate that a 10% jump in world oil prices would raise domestic inflation in Europe by 0.1% to 0.2%. The IMF said traders may be underpricing the risks of a broader regional conflict and the impact of tight monetary policy on asset classes if interest rates cuts are not imminent.

‘‘An intensification of geopolitical tensions could further disrupt shipping and energy production and push up inflation once again,’’ Adrian said.

The IMF said that some measures of investors’ inflation expectations had been rising in recent weeks and remained above the 2% threshold in Britain, America and France.

Traders have drastically reduced their bets on significant monetary easing this year and now expect only one or two interest rate reductions from the US Federal Reserve and the Bank of England this year, compared with estimates of up to six reductions made at the start of the year.