Emerging Economies Must Take Precautionary Measures Against US Rate Hikes: IMF

Indian customers purchase grains from a shop at a market in New Delhi, India, on Feb. 16, 2015. Rising food prices will put more than 40 million people in poverty if left unchecked, World Bank says. Raveendran/AFP/Getty Images

Emerging economies across the world must prepare for interest rate hikes in the U.S. based on their circumstances and vulnerabilities, said the International Monetary Fund (IMF), as ripple effects of the hike could result in adverse feedback loops like financial instability, currency depreciation, and rapid inflation.

Surging prices, tight labor market, and Omicron-related disruptions have led to the U.S. Federal Reserve tightening its monetary policy and accelerating the tapering of asset purchases to rein in the 39-year-high inflation.