IMF chief compares inflation to a ghost: The head and body are in the bottle, but the legs are hanging down
"Global policymakers have made significant strides in containing inflation without triggering a recession," International Monetary Fund (IMF) Managing Director Kristalina Georgieva said today. As reported by "Reuters", Georgieva, speaking at the World Economic Forum (WEF) in Davos, struck a cautiously optimistic tone, but stressed that there is still work to be done.
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“The genie’s head is in the bottle, most of the genie’s body is in the bottle, it’s kind of stuck there, but the legs are still hanging out,” Georgieva noted, using a metaphor to describe the current state of inflation control. “We need to push it all the way,” she added, stressing that efforts to fully contain inflation must continue.
Georgieva's comments reflect a global economic environment in which central banks have been aggressively raising interest rates over the past year. The aim has been to reduce inflation while minimizing the risk of economic downturns. While recent data suggests that inflation rates are declining in many major economies, the pace and scope of the recovery remain uneven.
She praised policymakers for their success so far, noting that they have managed to stabilize economies despite geopolitical tensions, energy crises and supply chain disruptions. However, she warned that premature celebration could jeopardize these gains, especially as uncertainties remain such as fluctuating energy prices and ongoing financial instability in some regions.
At the WEF, discussions among economic leaders highlighted the importance of coordinated global action. Policymakers must address complex challenges, including rising interest rates in advanced economies, which could put pressure on emerging markets through capital outflows and currency depreciation.
The IMF projects that global inflation will continue to decline in 2025, provided that central banks remain vigilant and accommodative. However, Georgieva urged policymakers to closely monitor potential risks, such as a resurgence in inflationary pressures or an unexpected slowdown in global growth.
