Inflation, Russia-Ukraine war draw G7 focus
KOENIGSWINTER, Germany (AP) — Finance ministers for the Group of Seven leading economies grappled, Thursday, with deepening inflation concerns and the immediate effects of Russia’s war in Ukraine, with US Treasury Secretary Janet Yellen promising that the allies would put together enough additional aid to help Ukraine “get through this.”
“All of us pledged to do what’s necessary to fill the gap,” Yellen said as the ministers finished their first of two days of talks. Although she did not have a final number for the expected aid package, Yellen said: “The message was that we stand behind Ukraine. We’re going to put together the resources that they need.”
Yellen warned, though, that it all adds up to a “very difficult economic situation,” with ongoing sanctions against Russia that could generate some blowback for the US and its allies, causing higher inflation worldwide. The risk of high inflation is that it could lead to slower growth and a broader downturn — a sign that the events kickstarted by Russian President Vladimir Putin’s invasion of Ukraine could have repercussions far beyond the front lines of the fighting.
Yellen took note of “not only supply shocks that we’ve had, but with the war continuing and with sanctions continuing to be applied, we may face more inflationary risks to the global economy.”
She added that finance leaders of leading economies are not planning to adjust the inflation targets that central bankers use as a guide when they adjust monetary policy to achieve a specific set rate of inflation.
Beyond high inflation, the finance ministers meeting in Koenigswinter, Germany, are confronting a refugee crisis, food insecurity exacerbated by the war, climate change and the ramifications of a multiyear pandemic.
German Finance Minister Christian Lindner, the meeting’s host, told reporters ahead of the meeting that Ukraine will likely need “a number of double-digit billion euros” over the coming months.