US has to focus on curbing inflation, IMF’s Georgieva says

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The US central bank has to pursue its mandate of controlling inflation because not doing so would have spillover effects for the rest of the world, International Monetary Fund Managing Director Kristalina Georgieva said.

Both Treasury Secretary Janet Yellen and Federal Reserve Bank Chair Jerome Powell are mindful of the impact their policies may have on other nations’ economies, Georgieva told reporters in Washington on Thursday.

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“Think of the the scenario in which inflation in the United States doesn’t get under control for a long period of time -- bad for the US, but it also has spillover impacts for the rest of the world,” she said.

Her comments came just as the US Labor Department released data showing the core consumer price index for September rose by more than forecast to a 40-year high of 6.6 percent. That pressures the Fed to keep raising interest rates aggressively.

The IMF is endorsing a strong focus on price pressures because the risk of higher inflation expectations becoming de-anchored has become more visible, Georgieva said.

“We cannot possibly allow inflation to become a runaway train -- it’s bad for growth and bad for people,” she said. “Bad especially for poor people.”

The International Monetary Fund is holding its annual meetings this week, bringing global finance and central bank chiefs -- along with their development and banking counterparts -- to the US capital at a fragile moment for the global economy.

The IMF on Tuesday cut its forecast for worldwide growth in 2023 and said that policies to tame high inflation may add risks to the global economy. Even President Joe Biden said this week that the US, the world’s biggest economy, could suffer a “very slight recession.

Cutting poor nations’ debt under discussion

With debt for a growing number of countries becoming unsustainable, policymakers meeting in Washington this week are talking about finding ways to reduce those debt burdens, World Bank President David Malpass said.

Arranging help for low-income nations in debt distress through the institutions such as the International Monetary Fund “means that you’re under the gun,” Malpass said in an interview with Tom Keene on Bloomberg Television on Thursday.

“A better way to do it is to find a way to get to actual debt reduction so that you can you have light at the end of the tunnel, get out from under the debt,” he said, adding that this is “under discussion.”

Read more: US consumer prices increase more than expected in September, jobless claims rise

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