Despite continued concerns about financial stability, central banks around the world should continue to fight inflation by raising interest rates, the chief of the International Monetary Fund told AFP on Thursday.
Since last year, central banks have been hiking their benchmark lending rates to combat inflation, which has reached levels not seen in many nations, including the United States, in decades.
However, their fight has been compounded by the recent failure of Silicon Valley Bank due to excessive interest-rate risk, which triggered a period of instability in the banking sector on both sides of the Atlantic.
“We don’t envisage, at this point, central banks stepping back from fighting inflation,” IMF managing director Kristalina Georgieva said in an interview ahead of the fund’s spring meeting next week.
“They have to stay the course in a much more difficult, more complex environment,” she said.
So far, the largest casualty has been Credit Suisse, which was driven by regulators to merge with regional rival UBS due to concerns about its long-term financial stability.
However, Georgieva stated that “central banks must continue to prioritize fighting inflation and then supporting financial stability through various instruments.”
