Connect with us

Hi, what are you looking for?

World News

IMF’s Georgieva says central bankers must be ‘stubborn’ in fighting inflation

WASHINGTON — Central bankers must be persistent in fighting broad-based inflation, International Monetary Fund (IMF) chief Kristalina Georgieva said on Wednesday, conceding that many economists were wrong when they predicted last year that inflation would ease.

“Inflation is stubborn, it is more broad-based than we thought it would be,” she said. “And what it means is … we need central bankers to be as stubborn in fighting it as inflation has demonstrably been.”

If fiscal policy and monetary policy worked well, next year might prove less painful, she said at an event with French European Central Bank policy maker Francois Villeroy de Galhau. But if fiscal policy was not targeted sufficiently, it could become the “enemy of monetary policy, fueling inflation,” she said.

Ms. Georgieva’s comments came a day after the US reported an unexpected rise in August consumer prices, with rent and food costs continuing to climb.

US Treasury Secretary Janet Yellen, in an interview with CBS News, said she believed inflation “will come down over time” due to the actions of the Federal Reserve. Ms. Yellen said the Biden administration is trying to complement the Fed’s moves.

Ms. Georgieva said the surprising rise in inflation was “just one snippet of the uncertainty and difficulties” the global economy faced. Both the coronavirus disease 2019 (COVID-19) pandemic and Russia’s invasion of Ukraine contributed to surging prices and a cost-of-living crisis.

In a blog, the IMF warned that higher oil prices were driving up all consumer prices, which could result in a wage-price spiral if these second-order effects were sustained. Central bankers should respond “firmly,” it said.

When overall inflation is already high, as it is now, wages tend to increase by more in response to an oil-price shock, the IMF said, citing a study of 39 European countries. That showed people were more likely to react to price increases when high inflation was visibly eroding living standards, it said, noting that the larger the second-round effects, the greater the risk of a sustained wage-price spiral.

“If large and sustained, oil price shocks could fuel persistent rises in inflation and inflation expectations, which should be countered by a monetary policy response,” the IMF said, noting that people tended to seek higher compensation for oil price rises.

However, even in a high-inflation environment, wages stabilized after a year rather than continuing to rise at a steady clip, it said.

“To the extent that central banks remain adequately vigilant, current high inflation could still cause higher compensation for the cost of living than usual but need not morph into a sustained increase in inflation,” the IMF said. — Reuters

    You May Also Like


    The head of the International Monetary Fund has warned of increased risks to the stability of the financial system after weeks of banking sector...


    1.22 billion people use Instagram every month. That’s a huge number of Instagrammers trying to hit it big on the platform all at the...


    The Home Office has made next to no progress in tackling criminal fraud during the past five years, despite it having become Britain’s most...


    Since the rise of online casinos, cybersecurity has become a major concern for both casino operators and players alike. The transactions that go around...

    Disclaimer:, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2023 | All Rights Reserved