MNI: IMF Chief Expects Notable Growth Markdown, Higher Prices

New forecasts by the International Monetary Fund will point to a difficult future for the global economy marked by slow growth and higher inflation, IMF Managing Director Kristalina Georgieva said Thursday, noting the need for strong and independent central banks to protect price stability. 

"Our new growth projections will include notable markdowns, but not recession. We will also see markups to the inflation forecasts for some countries," she said according to prepared remarks, previewing fresh projections to be released next week for the IMF Spring Meetings in Washington. 

"To protect price stability, monetary policy must remain agile and credible, supported by a strong commitment to central bank independence," she said. "Central bankers must keep an eagle eye on the data—including higher inflation expectations in some cases." (See: MNI INTERVIEW: Fed Needs More Hawkish Message - Emmons)

The IMF chief said the consequences from the recent tariff increases, pauses, escalations, and exemptions will be significant, as the U.S. effective tariff rate has jumped to levels last seen several lifetimes ago. She pointed to costly uncertainty, rising trade barriers that will hit growth upfront, and the erosion of productivity over the long run, especially in smaller countries. 

Higher public debt burdens compared to just a few years ago means economies face the new challenges from a weaker starting position, she said. "Some countries may experience shocks necessitating renewed fiscal support; this, if it must be provided, should be targeted and temporary."

Georgieva also cautioned that "protracted high uncertainty raises the risk of financial market stress." Unusual movements in bond and currency markets should be taken as a warning, she said. "Everyone suffers if financial conditions worsen."