Inflation curbed with interest rate hikes, no recession triggered – IMF boss

The Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, has described the global economy’s ability to reduce inflation without sparking a recession as unprecedented.

Speaking at the World Economic Forum Annual Meeting in Davos, Switzerland, Georgieva noted that previous inflationary periods often led to aggressive interest rate hikes, resulting in economic downturns.

However, she highlighted that the current approach has kept inflation in check while maintaining economic growth.

“This is the first-time inflation is coming down, interest rates remain somewhat high, and yet we still have growth—though below historic averages,” she said. “We have 3.3% growth, compared to a historical average of 3.8%.”

She credited the shift to stronger economic policy coordination mechanisms developed after the global financial crisis, which allow for more synchronized responses when needed while enabling policy flexibility where necessary.

“After the global financial crisis, the world created mechanisms for economic policy coordination that didn’t exist before,” Georgieva explained.

The IMF has projected global GDP growth at 3.3% in 2024, with inflationary pressures easing across major economies. However, interest rates remain high as central banks aim to sustain price stability.

Source: Citi Business News