The International Monetary Fund (IMF) has disclosed that inflation is decreasing at a faster pace than anticipated, although it hasn’t been entirely eradicated. Kristalina Georgieva, the Managing Director of the IMF, made this known during the China Development Forum (CDF) 2024 in Beijing, which was convened by the Atlantic Council Think Tank. She encouraged central bankers to be cautious in their decision-making regarding interest rate cuts based on incoming data.
According to Georgieva, headline inflation for advanced economies was 2.3% in the final quarter of 2023, down from 9.5% just 18 months ago, and this downward trend is expected to persist throughout 2024. This will enable central banks in major advanced economies to begin cutting rates in the second half of the year, although the pace and timing would differ.
Georgieva emphasized the importance of central banks maintaining their independence during this final stretch. She urged policymakers to resist calls for early rate cuts when necessary, stating that premature easing could result in new inflation surprises that may even necessitate a further round of monetary tightening. Delaying too long, on the other hand, could dampen economic activity.
Georgieva also stated that next week’s World Economic Outlook would reveal that global growth was marginally stronger as a result of robust activity in the United States and many emerging market economies, but she didn’t provide any new specific forecasts. She stated that the global economy’s resilience was being boosted by strong labour markets, an expanding labour force, robust household consumption, and an easing of supply chain issues. Nonetheless, she noted that there were still “plenty of things to worry about.”
Georgieva went on to say that the global environment had become more difficult. Geopolitical tensions, she said, raised the risk of fragmentation. According to her, we operate in a world in which we must prepare for the unexpected, as we learned over the last few years.
Georgieva said that global activity was weak compared to historical standards and that growth prospects had slowed since the global financial crisis of 2008-2009. She stated that the global output loss since the start of the COVID-19 pandemic in 2020 was $3.3 trillion, disproportionately affecting the most vulnerable nations. Georgieva stated that the United States had the strongest rebound among advanced economies, thanks to rising productivity growth. The euro area’s activity, she noted, is recovering more gradually, owing to the lingering effects of high energy prices and weaker productivity growth. Countries like Indonesia and India among emerging market economies, she added, are performing better, but low-income countries have experienced the most severe scarring.
According to the National Bureau of Statistics (NBS), Nigeria’s annual inflation rate increased to 31.70% in February from 29.90% in January. The statistics office stated that the February headline inflation rate represented a 1.80% increase over the January headline inflation rate.
