Andrea Shalal and David Lawder

WASHINGTON, (Reuters) – The International Monetary Fund’s chief economist stated Tuesday that he was concerned by rising inflation expectations and could become entrenched at higher levels. This would prompt more severe monetary policy tightening for advanced economies.

Pierre-Olivier Gourinchas told Reuters, in an interview, that he started his transition into the IMF’s economic counsellor position in January. This is because the conflict in Ukraine has caused energy and food prices spikes. It may also damage the expectations that decades-high levels of inflation will start to decline this year.

According to the former University of California Berkeley economist, a “very tight labor market” is driving Americans towards higher wages in an effort to catch up with rising prices. These could be helping to entrench inflationary hopes.