Global interest rates will likely continue to rise until 2023, when “overheated” rates will begin to “cool down” in response to central bank action, International Monetary Fund Managing Director Kristalina Georgieva told CNBC on the sidelines of the G -20 in Bali.
Commodity prices such as oil may have stabilized and started to decline slightly in recent months, but Ms Georgieva said they would do so in response to recessionary risks, not necessarily because inflation had been tamed .
“Central banks are tightening (raising) interest rates to control inflation, which is a priority. They should continue until it is clear that inflation expectations remain firmly anchored,” Georgieva told CNBC. cited by BNR.
“At the moment we still see inflation rising, so we need to pour some ‘cold water’ on it,” she added.
Supply chain disruptions caused by the pandemic have created shortages, while the war in Ukraine has exacerbated these trends. The result is a spike in commodity prices, including staples such as food, fertilizer and energy. While food price inflation was already underway even before the pandemic and the war, the two events only exacerbated the problem.
“Although many data used to determine inflation register a slowdown, all signs show that inflation is still not under control,” Kristalina Georgieva told CNBC.
She added that it was imperative that inflation be controlled, otherwise incomes would be eroded, hitting the poorest parts of the world the hardest.
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