IMF's Chief Warns Rushed Rate Hikes Choking Global Growth
Speaking to media on the sidelines of the IMF and World Bank Spring Meetings in Washington, Georgieva urged monetary policymakers to tread carefully, noting that long-term inflation expectations remain anchored.
"It is important that the central banks act carefully," she said, adding that institutions with strong credibility can afford to take a wait-and-see approach while remaining ready to respond if needed.
Georgieva specifically flagged the risk that the 2022 inflation shock could prompt an overreaction from policymakers. "My worry is that because of 2022, now central banks may say 'let's move faster' and that could be dangerous because it would suffocate growth," she said.
Her remarks followed the IMF's decision earlier this week to cut its global growth forecast for the year to 3.1%, attributing the downgrade to a major oil shock triggered by the Middle East conflict. The fund has further warned that risks are skewed toward a more severe scenario, under which global growth could decelerate to 2.5% this year while the average petroleum spot price index climbs to around $100 per barrel.
The ongoing conflict has already stoked inflationary pressures through surging energy costs, intensifying debate among policymakers over whether the latest price shock will prove short-lived or more entrenched. Major central banks have nevertheless largely maintained a cautious stance as they assess the inflation trajectory in the months ahead.
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