IMF Warn Global Interest Rates will Remain High. The International Monetary Fund (IMF) estimates that global benchmark interest rates will remain high in 2024, possibly even holding until 2025.
This was conveyed by IMF Managing Director Kristalina Georgieva in the Plenary Session of the Asean Indo-Pacific Forum (AIPF), on the sidelines of the 2023 Asean Summit or Summit, Tuesday (5/9/2023).
Kristalina said this condition had consequences for developing countries, including Asean, namely increasing costs or the cost of money and pressure on currencies. According to him, this is the result of high interest rates in developed countries, especially the United States (US) and Europe.
He assessed that the world economy has shown extraordinary resilience to various current global challenges. However, this comes at a very high price.
First, namely the loss of potential output. He gave an example, currently only one major economy, namely the US, has fully recovered, while other countries are still lagging behind.
IMF Warn Global Interest Rates will Remain High. Europe’s economy is expected to grow by only 2 percent, China and most developing countries grow 5 percent, and low-income countries grow in the range of 6 to 7 percent.
Second, supply chain disruptions due to the pandemic and war in Ukraine have put downward pressure on prices and inflation in most developed and many developing countries.
Previously, Federal Reserve (The Fed) Chair Jerome Powell hinted that interest rates would remain high and even increase further if inflation in the United States (US) failed to cool. This statement was made by Powell in a long-awaited speech at the US central bank’s annual conference in Jackson Hole, Wyoming on Friday (25/8/2023).
Powell emphasized that the Fed’s inflation fighting work is not done while noting progress in slowing price increases. He also said the central bank would proceed with “caution,” leaving room for the Fed to keep rates on hold at its next meeting in September, after a hike in July to a 22-year high in a 5.25-5.5 percent range. .