Managing Director Kristalina Georgieva stated on Thursday that the IMF believes that reducing interest rates too soon poses a bigger danger to the world economy than moving “slightly” too late.
In an effort to reinflate the economy after the pandemic, the US Federal Reserve, the European Central Bank (ECB), and other institutions have raised interest rates in recent months.
Many of the developed and emerging economies of the globe are already seeing a decline in inflation, thus focus is now shifting to when they should begin lowering interest rates to encourage investment and economic expansion.
“Our team has looked back in history, and the conclusion they drew is that the risk of premature easing is higher than the risk of being slightly behind,” Georgieva told reporters during a briefing at the International Monetary Fund in Washington.
“But don’t keep it tight if you don’t have to,” she said. “So look at the data, act on the data.”
