The International Monetary Fund (IMF) says inflation is easing faster than expected, although not fully curtailed, the Managing Director of IMF, Kristalina Georgieva, has said.
Georgieva spoke on Thursday at the China Development Forum (CDF) 2024, in Beijing hosted by the Atlantic Council Think Tank.
She urged central bankers to carefully calibrate their decisions on cutting interest rates to incoming data, adding that headline inflation for advanced economies stood at 2.3 percent in the final quarter of 2023, down from 9.5 percent just 18 months ago.
The IMF boss observed that the downward trend was expected to continue in 2024, as this would create the conditions for central banks in major advanced economies to begin cutting rates in the second half of the year, although 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, pointing out that premature easing could see new inflation surprises that may even necessitate a further bout of monetary tightening.
“On the other side, delaying for the cut too long could pour cold water on economic activity,” she said.
Georgieva said next week’s World Economic Outlook would show that global growth was marginally stronger given robust activity in the U.S. and in many emerging market economies, but gave no specific new forecasts.
The global economy’s resilience, she said, 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.
She said global activity was weak by historical standards and prospects for growth had been slowing since the global financial crisis of 2008-2009.
“The global output loss since the start of the COVID-19 pandemic in 2020 was $3.3 trillion, disproportionately hitting the most vulnerable countries.”
Georgieva said the U.S. had seen the strongest rebound among advanced economies, helped by rising productivity growth.
“Euro area activity is recovering more gradually, given the lingering impact of high energy prices and weaker productivity growth.
“Among emerging market economies, countries like Indonesia and India are faring better, but low-income countries have seen the most severe scarring.”
The National Bureau of Statistics (NBS) said on Friday that Nigeria’s annual inflation rate rose to 31.70 percent in February, from 29.90 percent in January.
The statistics office said the February headline inflation rate showed an increase of 1.80 percent compared to the January headline inflation rate. (NAN)