IMF Chief: Higher interest rates are risky


03/27/2023

According to Kristalina Georgieva, head of the International Monetary Fund (IMF), central banks' increases in interest rates to combat inflation are resulting in greater risks to financial security.



Brandon Payne/WORLD BANK GROUP
"It is obvious that there are now more dangers to financial stability. As the recent events in the banking sector in some advanced economies demonstrate, the abrupt change from a long period of low interest rates to the much higher rates needed to fight inflation inevitably creates shocks and vulnerabilities, Ms. Georgieva said at the China Development Forum in Beijing.

She claims that although the recent events in the financial sector have "somewhat eased tensions," there is still a lot of uncertainty, which "underlines the need for vigilance."

According to the IMF, China will contribute to about one-third of worldwide growth, which will help the world economy. Ms. Georgieva recommended "increasing productivity and rebalancing the economy "toward less investment and toward more consumption-oriented growth that is longer lasting, less debt-dependent, and also helps address climate issues."

source: imf.org