IMF: downside risks rise, focus on inflation urged

WASHINGTON, Oct 20 (Reuters) - The International Monetary Fund's steering committee said on Saturday that downside risks to the world economy have increased, but monetary policy should continue to focus on price stability and careful assessment of inflation.

"Recent disturbances in financial markets in advanced economies are expected to have a moderating effect on growth in the near term, and downside risks to the outlook have increased," the International Monetary and Financial Committee said in its communique after its fall meeting here.

It said central banks have played a critical role in ensuring smooth functioning of money markets by providing necessary liquidity. "At the same time, monetary policy should focus on achieving price stability while continuing to assess carefully the inflation outlook, taking into account both the inflationary pressures stemming from tight commodity markets and rising oil and food prices and downside risks to growth,"