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IMF chief wants central banks to keep raising rates to hit ‘neutral’ level

International Monetary Fund chief Kristalina Georgieva said that central banks should keep raising interest rates further to fight inflation until they hit a “neutral” level, though in most cases they have not reached this point. Speaking to Reuters in Berlin a day before the European Central Bank is widely expected to raise rates by 75 basis points, the fund’s managing director said it would take until 2024 for the positive effect of central banks raising rates globally to be felt. The ECB had for months said that its first step ...

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IMF chief expects UK PM Sunak’s government to stick to fiscal discipline

IMF chief Kristalina Georgieva said on Wednesday she expects new Prime Minister Rishi Sunak to steer Britain towards fiscal sustainability and said he was right to warn the public of difficult decisions ahead. Speaking to Reuters in Berlin, Georgieva welcomed what she said was Sunak’s clarity and constructive attitude that she knew from his time as finance minister. She expects to speak to the recently appointed finance minister Jeremy Hunt in coming days. “The new prime minister comes with a platform that he has shaped during his days as a ...

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IMF concludes mission on Ukraine, urges authorities to avoid eroding tax revenues

An International Monetary Fund team held productive discussions with Ukrainian authorities in Vienna this week and will continue work in coming weeks on Ukraine’s request for enhanced program monitoring, IMF mission chief Gavin Gray said on Friday. Gray said IMF staff met with Ukrainian authorities, and discussed its findings with Finance Minister Serhiy Marchenko and Governor of the National Bank of Ukraine Andriy Pyshnyi. He said Russia’s invasion had caused tremendous human suffering and had a severe economic impact, with the fiscal deficit rising to unprecedented levels. But IMF officials ...

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IMF’s Gopinath: Fed and ECB right to tighten policy – Handelsblatt

Inflation in the United States is “very stubborn” and the Federal Reserve should “stay the course” and tighten monetary policy or else lose credibility, said Gita Gopinath, the International Monetary Fund’s first deputy managing director. The Fed has raised interest rates faster this year than any time since the early 1980s, when inflation was even higher and so entrenched in day-to-day American life that it took pushing short-term borrowing costs – and the unemployment rate – into double digits before price pressures finally receded. “Inflation continues to be very stubborn,” ...

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Asia Sails Into Headwinds From Rate Hikes, War, and China Slowdown

Asia’s strong economic rebound early this year is losing momentum, with a weaker-than-expected second quarter. We have cut growth forecasts for Asia and the Pacific to 4 percent this year and 4.3 percent next year, which are well below the 5.5 percent average over the last two decades. Despite this, Asia remains a relative bright spot in an increasingly dimming global economy. Waning momentum reflects three formidable headwinds, which may prove to be persistent: A sharp tightening of financial conditions, which is raising government borrowing costs and is likely to ...

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Global inflation causing ‘horrifying’ food insecurity, says IMF Africa head

Africa’s central banks are walking a tightrope trying to curb inflation that is mostly out of their control and causing “horrifying” food insecurity, the International Monetary Fund’s Africa head warned. The IMF’s twice-yearly Regional Economic Outlook released on Friday warned that 123 million people, or 12% of sub-Saharan Africa’s population, face acute food insecurity – where the lack of access to adequate food puts someone’s life or livelihood in immediate danger – by the end of the year. That compares to around 82 million people affected before the COVID-19 pandemic, ...

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Latin America Faces a Third Shock as Global Financial Conditions Tighten

As Latin American countries continue to grapple with the effects of two previous shocks, the pandemic and Russia’s invasion of Ukraine, they face a third shock: the tightening of global financial conditions. Growth momentum is currently positive, reflecting the return of service sectors and employment to pre-pandemic levels, and the overall support of favorable external conditions—high commodity prices, strong external demand and remittances , and rebounding tourism. This has led to several upward revisions to growth this year. But financing is becoming scarcer and costlier as major central banks raise ...

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IMF urges most Asian central banks to tighten policy further

Most Asian central banks must tighten monetary policy further as rising commodity prices and their currencies’ depreciation, driven by steady U.S. interest rate hikes, push inflation above their targets, the International Monetary Fund said. China and Japan are exceptions, where the economic recovery has been weaker, slack remains substantial and inflation has not risen as sharply as elsewhere, said Krishna Srinivasan, director of the IMF’s Asia and Pacific Department. Many Asian currencies depreciated “quite sharply” as U.S. monetary tightening led to widening interest rate differentials, helping push up import costs ...

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IMF sees Japan’s currency intervention as ‘signaling’ move with short-term impact

Japan’s currency intervention last month to stop a sharp slide in the yen was likely a “signaling action” to smooth volatility, though the impact of such moves tend to be short-lived, a senior International Monetary Fund official said on Thursday. Recent volatile market moves heighten the need for the Bank of Japan to maintain ultra-low interest rates and avoid making tweaks to yield curve control (YCC), Sanjaya Panth, deputy director for the IMF’s Asia and Pacific Department, told Reuters in an interview. “We think this is not a good time ...

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IMF’s Georgieva says 28 countries have expressed interest in new IMF support

International Monetary Fund Managing Director Kristalina Georgieva on Thursday said that the Washington-based lender has provided $90 billion on 18 new and augments programs since Russia’s invasion of Ukraine in February, and 28 countries have expressed interest in receiving new IMF support. Georgieva said during the IMF and World Bank annual meetings in Washington that the Fund’s lending is “aligned with our counter-cyclical role,” and since the pandemic began it has provided $260 billion in financial support to 93 countries. “And we now have 28 additional countries expressing interest in ...

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Asian economies may have to brace for rising debt and capital flight, IMF warns

Asia’s biggest economic challenges will be rising debt and capital flight as interest rates continue to rise, the International Monetary Fund has warned. The warnings come as the IMF trimmed its global growth predictions in its latest economic outlook this week and warned the new year would feel like a recession for many parts of the world. “Debt has gone up in Asia,” IMF Deputy Director of Asia and Pacific Department Anne-Marie Gulde told CNBC’s “Squawk Box Asia”. “First, private sector debt has gone up since the global financial crisis ...

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IMF fiscal chief underscores need for ‘orderly debt restructuring

Rising debt levels and mounting fiscal pressures underscore the urgency for more “orderly debt restructuring” efforts to put low-income countries on a more sustainable path, the International Monetary Fund’s fiscal chief said. Fiscal Affairs Director Vitor Gaspar told reporters the problems facing low-income countries had been exacerbated by food and energy shocks and climate disasters, and it was critical to frame policies that would avert social unrest. “The rise of extreme poverty and food insecurity that began before the pandemic should be addressed at the global level by a broad ...

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IMF chief admonishes UK officials over coherence of fiscal, monetary policies

International Monetary Fund Managing Director Kristalina Georgieva on Thursday rebuked Britain over its planned tax cuts, telling its finance minister and central bank chief that their policies should not be contradictory. Her comments during the IMF and World Bank annual meetings in Washington highlighted concerns about financial market turmoil triggered by Britain’s proposed “mini-budget” of increased spending and tax cuts that were threatening to overshadow bigger economic challenges, such as the fight against inflation and the impact of the war in Ukraine. Georgieva told a news conference that she discussed ...

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IMF chief economist says central banks’ inflation fight to last into 2024

Central banks’ fight against inflation may take another two years to play out, increasing unemployment and lowering living standards for many in the world, the International Monetary Fund’s chief economist said. In an interview with Reuters, IMF economic counselor Pierre-Olivier Gourinchas said that broad “core” inflation pressures beyond energy and food prices will take time to bring down to central bank targets of about 2%. “Our projection is that this will start coming down, but we will not be back to central bank targets in 2023,” Gourinchas said of inflation. ...

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IMF official: How China can handle growth headwinds

As one of the largest economies and a vital engine of the global economy, China can counteract growth headwinds with the right policies, an International Monetary Fund (IMF) official said. Given the giant size of the Chinese economy, the significant role that China has been playing in global economic growth and the Chinese economy’s “strong trade linkages in Asia as well as to commodity exporters and major global production hubs in other continents,” Joong Shik Kang, IMF’s deputy China mission chief, offered his views on how China can face economic ...

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