IMF’s Georgieva: Central banks should hike rates if inflation expectations de-anchor

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), said on Thursday that central banks should hike interest rates if inflation expectations threaten to de-anchor and ignite an inflation spiral, per Reuters.

Key takeaways

“IMF-World Bank meetings next week will focus on how to weather shock of now-paused war in Middle East.”

“Even most hopeful scenario downgrades growth forecast due to infrastructure damage, supply disruptions, loss of confidence.”

“IMF can scale up support for countries through existing programs and there are more programs to come.”

“We expect near-term demand for IMF support to rise to between $20 bln to $50 bln, given spillovers of the war.”

“Supply shock caused by war will continue to ripple through economy with oil refinery shutdowns, product shortages.”

“45 mln more people now facing food insecurity, bringing total number of those in hunger to over 360 mln.”

“War shock triggering higher short-run inflation expectations, but longer-run expectations have not changed.”

“Urging all countries to reject export controls, price controls that can further upset global conditions.”

“Using deficit-financed stimulus would increase burden on monetary policy.”