Addressing concerns about inflation, Gita Gopinath, the First Deputy Managing Director of the International Monetary Fund (IMF), stated on Tuesday that the battle against rising prices is still ongoing. She expressed the expectation that interest rates, while likely to decrease later this year, will remain higher than the levels observed immediately after the global financial crisis.
Speaking at a session during the World Economic Forum Annual Meeting 2024, Gopinath dismissed market speculations regarding an imminent cut in interest rates as premature. She cautioned against anticipating central banks to aggressively reduce rates, emphasizing that it is too early to reach such conclusions.
"The markets are expecting central banks to cut rates pretty aggressively. I think that's a bit premature to make that conclusion. We should expect rates to come down sometime this year but based on the data we see right now, we expect this to be more likely in the second half of this year," Gopinath commented.
While acknowledging the expectation of a decline in interest rates, she also expressed her belief that the likelihood of a deep recession is less. Gopinath's insights reflect the IMF's assessment of the global economic landscape, urging caution in predicting policy moves and emphasizing the need for a nuanced approach in navigating economic challenges.
(With Agency Inputs)
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