The unpredictable impact of tariffs on transitioning economies and global markets "would make it particularly difficult for central bankers to support their economies," Gopinath said.
When the pandemic hit, "central banks everywhere were moving in the same direction in the sense of easing monetary policy very quickly", cutting interest rates or launching bond-buying programs to stimulate growth in both high and middle-income economies, she noted, TASS reported.
Now, policymakers are forced to act on the spot. Gopinath warned emerging markets are "steering through the fog" due to White House trade policy volatility, exacerbating instability. "When we have this kind of a divergence you could end up with tightening global financial conditions, and emerging markets are particularly sensitive," the IMF official said.
Economists highlight such adverse effects for developing nations as slowed economic growth, capital flight, currency depreciation, and higher financing costs.