IMF chief: Central banks should think carefully about timing of interest rate cuts

International Monetary Fund Managing Director Kristalina Georgieva called on governments around the world to rebuild their financial capabilities on Friday, noting that central banks must think carefully about timing of interest rate cuts.

At a press conference during the annual meetings of the International Monetary Fund and the World Bank in Washington, Georgieva said, “In the near term, the focus should be on the fiscal side as an immediate priority. Financial buffers are depleted, yet fiscal pressures are high.”

She added that central banks should “remain vigilant, be evidence-based (and) watch the data carefully to ensure that they do not cut interest rates either too early or too late.”

Georgieva also warned that the global economy is now at risk of falling into a path of low economic growth and high debt, which poses major challenges for governments in terms of providing the resources needed to improve the opportunities of their people and confront climate change and other challenges.

The statement of the International Monetary and Financial Committee confirmed the agreement of the members of the International Monetary and Financial Committee on a number of points, the most important of which are ensuring the exit of the global economy from the current path of low growth and high debt, and the members welcoming the Fund’s efforts to enhance its monitoring of lending tools and capacity development.

The members also stressed that the global economy has proven its flexibility, especially with the stability of global growth and the continued moderation of inflation despite the differences between countries.