International Monetary Fund (IMF) Managing Director Kristalina Georgieva speaks during a briefing on the Global Policy Agenda at IMF headquarters during the IMF/World Bank Spring Meetings in Washington, DC on April 18, 2024.
Mandel Ngan | Afp | beautiful images
Kristalina Georgieva, managing director of the International Monetary Fund, downplayed the possibility of any negative impact from monetary policy differences between Europe and the United States, but said the problem could more serious in emerging markets.
Benchmark rates across most advanced economies have soared in recent years, as central banks aim to rein in inflation in the wake of the Covid-19 pandemic. These banks are now looking to lower interest rates again as the economy cools, although signals in the US suggest cuts may still be months away.
America’s high interest rate environment is often bad news for emerging markets, as it makes their debt – often priced in US dollars – more expensive. It could also trigger capital outflows as investors opt for better returns in the US and could cause much tighter financial conditions.
“This is a much more serious problem for countries where the impact of high interest rates in the United States is more profound — in many new market economies,” Georgieva told CNBC’s Silvia Amaro in Brussels on Monday. floating”.
“We also see some of this in Japan, and indeed there, policymakers’ attention must be increased to carefully monitor where volatility is becoming severe. than. In Europe, this does not happen.”
In the euro zone, she said that “we are not too worried about the exchange rate impact”, adding that IMF analysis shows a 50 basis point gap between the Reserve’s interest rates US Federal and European Central Bank interest rates “are likely to result in very small or 0.1 to 0.2% changes in exchange rates.”
“And that means here [in Europe] This is not a big deal,” she said.
