The biggest challenge facing central banks now is reducing inflation, the International Monetary Fund Kristalina Georgieva said, reports Reuters.

According to her, policymakers must take targeted measures to mitigate increases in food and fuel prices, while avoiding steps that could boost inflation.

IMF First Deputy Managing Director Gita Gopinath said the strengthening of the dollar is now at its highest level in more than 20 years, and fears about financial volatility also pose big problems in the current environment.

"There's really a very narrow path to get things right," Gopinath said, noting that the sharp rise in the dollar has had important macroeconomic consequences for a host of countries around the world.