The International Monetary Fund (IMF) released its latest World Economic Outlook (WEO).
The numbers pointed to slower global growth and revised lower from the previous WEO.
In the U.S. economy, there is a threat of stagflation, with the real GDP growth rate slowing to 1.6 percent in 2023 and 1.1 percent in 2024, the IMF warned.
“We are therefore entering a perilous phase during which economic growth remains low by historical standards and financial risks have risen, yet inflation has not yet decisively turned the corner,” said IMF chief economist Pierre-Olivier Gourinchas. “More than ever, policymakers will need a steady hand and clear communication. The appropriate course of action is contingent on the state of the financial system.”
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IMF economists noted that “inflation is much stickier than anticipated even a few months ago,” adding that central banks need to concentrate on price stability, despite the banking turmoil and sluggish growth rates.
“At this point in a tightening cycle, we would expect to see more signs of output and employment softening,” said Gourinchas. “Instead, both output and inflation estimates have been revised upward for the last two quarters, suggesting stronger than expected global demand. This may call for monetary policy to tighten further or to stay tighter for longer than currently anticipated.”
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