IMF cautions central banks of premature interest rate reductions

(MENAFN) The International Monetary Fund (IMF) has issued a cautionary message to central banks worldwide, advising against prematurely reducing their interest rates. During a Thursday press briefing, IMF spokesperson Julie Kozack highlighted that although inflation levels have been on the decline in many economies, they have not yet reached the target or come sufficiently close to it.

Kozack emphasized the IMF's stance, affirming that the task of stabilizing monetary policy is not yet complete. She stressed the importance for central banks to remain vigilant against unwarranted easing of monetary policy measures.

However, Kozack acknowledged that certain adjustments in monetary policy might be warranted in cases where underlying inflation and inflation expectations exhibit clear and decisive movements toward the central banks' target levels.

Regarding economic growth projections, Kozack disclosed that the IMF has revised its global economic growth forecast upward to 3.1 percent for 2024. This represents a 0.2 percentage point increase from the 2.9 percent estimate outlined in the institution's World Economic Outlook (WEO) report issued in October.

The latest WEO Update, released in January, forecasts a global economic growth rate of 3.2 percent for 2025. Kozack attributed this upward revision primarily to the resilience demonstrated by the US economy and several significant emerging markets and developing countries.

"At the same time, inflation has been falling faster than expected in most regions, and that is thanks to the easing of supply constraints and the impact of restrictive monetary policy," she further mentioned.


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