The International Monetary Fund (IMF) has urged central banks in many countries to maintain a cautious approach to monetary policy, warning that inflationary pressures remain persistent despite efforts to bring prices under control.
IMF Managing Director Kristalina Georgieva said rising energy and food prices, tariffs, increased defence spending and growing government debt were contributing to continued inflationary pressure across the global economy.
Speaking ahead of the IMF and World Bank Annual Meetings in Bangkok, Georgieva said policymakers should consider maintaining a tighter monetary policy stance where necessary to prevent inflation from becoming more entrenched.
“Now may be a good time for a prudently hawkish bias in many countries’ monetary policy,” she said, describing recent interest rate increases by the US Federal Reserve, the European Central Bank and the Bank of Japan as appropriate.
Georgieva warned that higher energy prices were pushing up inflation, interest rates and government bond yields. She noted that persistently expensive oil could continue to affect economies even if the conflict disrupting supplies in the Middle East ended soon.
Oil prices remained elevated, while disruptions to refining capacity and shipping routes were adding to the cost of key energy products. These pressures could feed into transportation, production and household expenses.
The IMF chief also highlighted the growing burden of public debt, which she said was weakening economic growth and adding to inflationary pressures. Global public debt is projected to exceed 100 per cent of gross domestic product before 2030.
She argued that governments could no longer depend on faster economic growth alone to address their fiscal challenges. Instead, highly indebted countries need credible medium-term plans to control spending and stabilise public finances.
Georgieva also pointed to the rapid expansion of artificial intelligence investment as another factor shaping the global economic outlook. While AI could support productivity and add to global growth, she warned that disappointing returns on major investments could trigger a wider market shock.
She called on governments to strengthen economic resilience through workforce development, improved energy security, business reforms and more effective regulation.
The IMF’s position highlights the difficult choices facing policymakers as they balance the need to control inflation against concerns about borrowing costs and slowing economic activity.
