IMF interest rate warning

Georgieva made assessments at the “State of the Global Financial System” event organized by the Milken Institute.

Stating that there have been a series of mind-boggling events in recent years, from the pandemic to the war in Ukraine, Georgieva claimed that there was a rapid transition from low interest rates to high interest rates.

VULNERABILITY REVEALED

Georgieva noted that the rapid rise in interest rates revealed vulnerabilities in the financial sector.

Noting that more weaknesses may emerge in the banking sector, Georgieva stressed that sector representatives must anticipate shocks and be ready to act when they occur.

Georgieva said that economic growth has slowed, but inflation has not fallen as fast as desired.

ATTENTION TO INFLATION

Noting that inflation is uncomfortably above central banks’ target, Georgieva noted that banks need to keep interest rates at a level where they will eventually bring inflation down. (AA)