Georgieva: Sharp tightening could hit markets

International Monetary Fund (IMF) President Kristalina Georgieva stated that markets have begun to adjust in an orderly manner to the perception that interest rates will remain high for a long time, adding, "However, a sharp further tightening of financial conditions could hit markets, banks, and financial institutions." Georgieva also pointed out the need to increase medium-term growth.

International Monetary Fund (IMF) President Kristalina Georgieva expressed at a press conference held within the scope of the IMF-World Bank annual meetings in Marrakech, Morocco, that the global economy is experiencing serious shocks that have become the "new normal."

PRIORITY IS FIGHTING INFLATION

Stating that they are facing deepening divergences in the economy, Georgieva said, "We are primarily focused on winning the fight against inflation. Price stability is a prerequisite for growth. This also protects people, especially the poorest segments of society. We also need to maintain financial stability."

Georgieva noted that inflation is falling but is still above the targets of many countries, and stated the following:

"For this reason, interest rates must remain high for a long time. As we have seen from the movements in bond yields in the US and Europe in recent weeks, markets are adjusting to the understanding that interest rates will remain high for a long time. However, a sharp further tightening of financial conditions could hit markets, banks, and financial institutions. Therefore, strong financial supervision is essential. We also need to increase medium-term growth. Today, we do not have the growth we need to recover from the effects of shocks and to offer opportunities so that people can see their living standards rise."

Regarding the effects of the Israel-Palestine conflict on the global economy, Georgieva said that they are following the process closely but that it is too early to assess its impacts.