These comments by Georgieva came a day after the decision by the US Federal Reserve and the Bank of England to keep interest rates unchanged.
“We are prepared for a soft landing, but we are still 50 feet from the ground and we know that until we touch the ground, it is not guaranteed,” stressed the IMF managing director.
The managing director of International Monetary Fund (IMF), Kristalina Georgievaexpressed on Thursday that making cuts in reference rates too quickly, when inflation has not yet achieved the expected levels, represents a higher risk for the economy than choosing to do so at a later time.
Georgieva, quoted by France Press, noted that “After reviewing history, our team concludes that premature easing implies a higher risk than intervening a little later“.
At a news conference in Washington, the official urged not to keep rates rigid unnecessarily and emphasized the importance of analyzing available data before making decisions.
The warning comes after the Fed meeting
These comments from Georgieva came a day after the Federal Reserve Monetary Policy Committee (Fed) decided to keep its reference rates in the range of 5.25 to 5.50%, which cooled expectations of a quick cut.
In the same line, the Bank of England also chose to maintain its rates this Thursday, and last week, the European Central Bank (ECB) did the same for the third consecutive time, showing caution in the face of the evolution of inflation in the eurozone, despite its slowdown in recent months.
The directors of these central banks indicated that they will not consider rate cuts, unless there is “greater confidence” that inflation is advancing in a “sustainable” manner towards its long-term annual target of 2%.
Georgieva also commented on the economic situation in the United States, mentioning that the country is close to achieving a “soft landing“, where the authorities manage to bring inflation to the target without causing a recession.
“We are prepared for a soft landing, but we are still 50 feet from the ground and we know that until we touch the ground, it is not guaranteed,” stressed the IMF managing director.
Source: Ambito
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