IMF Tells Central Banks To “Avoid Premature Easing”

While global growth remains lacklustre, inflation remains too high and the IMF warned in its October World Economic Outlook that most countries won’t return to their inflation targets until 2025. They noted that inflation expectations need to come down. It still expects that inflation can fall to target while still ensuring a soft landing, but it warned central banks to “avoid premature easing” and noted that they still had more to do.

• Global inflation has been revised up 0.1pp to 6.9% in 2023 down from 8.7% last year and by 0.6pp to 5.8% in 2024, due to higher core inflation expectations. Global core CPI should ease to 6.3% this year (+0.3pp) from 6.4% last year and then to 5.3% (+0.6pp) in 2024, with the changes a bit misleading as they were due to upward revisions to Turkey. Core is generally proving more persistent though across countries due to tight labour markets and elevated services inflation.
• The increase in 2024 headline CPI expectations was driven by slower than thought disinflation in developing economies with inflation now expected to be 1pp higher at 7.8% up from 8.5% this year. 2024 OECD CPI was revised 0.2pp to 3% after 4.6% in 2023.
• See IMF World Economic Outlook here.

Source: MNI - Market News/Refinitiv