The first stages of a World Bank revamp are set to begin by April, amid a push for lenders to evolve and meet global challenges like climate change, US Treasury Secretary Janet Yellen said Thursday.

While development lenders need to further their main mission of poverty reduction and inclusive growth, it is also key that they tackle global problems, she said in a speech at the Center for Strategic and International Studies in Washington.

"(Their) core model involves countries borrowing to make specific investments aimed at addressing development constraints in their own countries," Yellen said.

"That model is insufficient to meet the moment," she added.

This is because it tends to underinvest in battling global challenges that go beyond a country's borders.

"We have begun the evolution of the World Bank. Next, we expect to take this agenda to the regional development banks," she said.

"It's time for these banks to address global challenges head on — with the urgency and scale that is required," she added.

Last October, before the annual meetings of the International Monetary Fund and World Bank, Yellen said she and other leaders would call on the bank's management to develop an evolution roadmap by December.

The United States is the World Bank's largest shareholder.

Outlining ongoing work at the World Bank, Yellen said it must create incentives for countries to fight global challenges such as by lowering investment costs for certain projects to be more viable.

For example, the bank could identify "concessional resources" that go towards incentivizing the decommissioning of coal plants and protecting displaced workers during a clean energy transition.

The bank could also make it easier for cities to gain access to funding for climate-smart infrastructure, she said.

"The first phase of implementation should begin by the World Bank and IMF spring meetings in April," according to Yellen.

Shareholders are working on updates to the bank's vision and mission, and there are discussions on ways to boost financial headroom.

"We are asking for additional reforms to be decided and implementation to begin by the… annual meetings in October," she added.

An initial paper from bank management dated December said calls for a roadmap to respond to poverty reduction, shared prosperity and global challenges are "welcome." It added that progress to tackle these issues will take a "concerted global effort."

Asian markets follow Wall St down as rate hike fears persist
Hong Kong (AFP) Feb 10, 2023 –

Asian markets tracked another loss in New York on Friday as interest rate hike fears course through trading floors after last week's blockbuster jobs report.

While data in recent months has shown inflation is coming down, the employment figures showed the economy remained robust, leading several top Federal Reserve officials to warn much more work was needed to get prices under control.

Having spent January optimistic that the days of central bank tightening would soon come to an end, traders have been brought back down to earth this month as they contemplate borrowing costs going higher and staying there longer than expected.

Richmond Fed president Thomas Barkin added his voice to his colleagues this week in warning that the bank had to "stay the course" in lifting rates if it wanted to bring inflation down to its two percent target.

However, with borrowing costs going higher still — and some warning it could go to a two-decade-high six percent — fears are growing that the world's top economy will tip into recession.

"Inflation most likely won't get conquered if the economy doesn't break," said OANDA's Edward Moya.

"Disinflation trends remain in place but it will be hard for them to continue with a strong labour market and as the economy keeps on growing. We've seen commodities and goods price declines, but core services remain tricky."

He added that the Fed would continue hiking until personal consumption expenditure — the bank's preferred inflation gauge — was trending sharply lower. "And that might not happen until the summer," he said.

After Wall Street's retreat, most of Asia was in the red.

Hong Kong, Shanghai, Sydney, Seoul, Singapore, Taipei and Jakarta sank, though a weaker yen helped Tokyo post morning gains.

Analysts said next week's consumer price index release will be a key data point, which could play a big role in the Fed's plans for future rate hikes.

"Whether or not the Fed has tightened financial conditions sufficiently to bring inflation down to target over time is going to be the most significant debate in the market agenda through the first half of the year," said SPI Asset Management's Stephen Innes.

He added that "the fear is now that we could still be talking rate hikes in the third quarter".