The International Monetary Fund (IMF) notes that although inflation is declining more quickly than anticipated, it is still present. IMF Managing Director Kristalina Georgieva was cited as saying this at the China Development Forum (CDF) 2024 in Beijing, according to a statement released by the Fund on Thursday.
The event was hosted by the Atlantic Council Think Tank. She advised central bankers to carefully consider incoming data while determining whether to lower interest rates.
Headline inflation for advanced economies, according to Georgieva, dropped from 9.5% just 18 months ago to 2.3% in the last quarter of 2023, and the decline was predicted 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 amount 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 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. However, she 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.”
Nigeria’s annual inflation rate rose to 31.70 per cent in February from 29.90 per cent in January, the National Bureau of Statistics (NBS) said on Friday. The statistics office said the February headline inflation rate showed an increase of 1.80 per cent compared to the January headline inflation rate.
