IMF Official Says Interest Rate Cut Expectations Are A Bit Premature. The International Monetary Fund (IMF) believes that market expectations of a rapid reduction in interest rates are considered premature because the fight against inflation is not yet over.
This was stated by IMF First Deputy Managing Director Gita Gopinath at the World Economic Forum (WEF) which is currently taking place in Davos, Tuesday (16/1/2024).
Meanwhile, she said that the work was not finished because the labor market was still tight after sharp interest rate increases in the last two years. She said that he expects interest rates to decrease in 2024. However, based on the data she is seeing at the moment, they estimate that more interest rate cuts will occur in the second half of 2024.
Her remarks were in line with global central bank officials who defied investors’ expectations of aggressive interest rate cuts. Gopinath observed that the economy remains resilient amidst tight conditions, so the chances of a deep recession are smaller.
She continued, saying that his party felt that the soft landing scenario had a fairly large increase in probability, because inflation had decreased without requiring a large loss of economic activity.
IMF Official Says Interest Rate Cut Expectations Are A Bit Premature. In the long term, Gopinath said policy interest rates will be higher than in the period after the global financial crisis when central banks sought to increase inflation.
