The International Monetary Fund (IMF) says inflation is easing faster than expected but has not been fully defeated.
Managing Director of IMF, Kristalina Georgieva,was quoted in a statement by the Fund on Thursday to have said this at the China Development Forum (CDF) 2024, in Beijing.
The event was hosted by the Atlantic Council Think Tank.
She urged central bankers to carefully calibrate their decisions on cutting interest rates to incoming data.
Georgieva said headline inflation for advanced economies was 2.3 per cent in the final quarter of 2023, down from 9.5 per cent just 18 months ago, and the downward trend was expected to continue in 2024.
According to her, this will create the conditions for central banks in major advanced economies to begin cutting rates in the second half of the year.
She, however, said that the pace and timing would vary.
“On this final stretch, it is doubly important that central banks uphold their independence,” Georgieva said.
She urged policymakers to resist calls for early rate cuts when necessary.
“Premature easing could see new inflation surprises that may even necessitate a further bout of monetary tightening.
“On the other side, delaying too long could pour cold water on economic activity,” she said.
Georgieva said next week’s World Economic Outlook would show that global growth is marginally stronger given robust activity in the U.S. and in many emerging market economies, but gave no specific new forecasts.
She said the global economy’s resilience was being helped by strong labour markets and an expanding labour force, strong household consumption and an easing of supply chain issues, but said there were still “plenty of things to worry about”.
“The global environment has become more challenging. Geopolitical tensions increase the risks of fragmentation.
“As we learned over the past few years, we operate in a world in which we must expect the unexpected,” Georgieva said.
NAN
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