IMF's view: The global fight against high inflation is 'almost won'
The global war against inflation has largely been won — and at surprisingly little cost to economic growth, the International Monetary Fund has declared
WASHINGTON — The global war against inflation has largely been won — and at surprisingly little cost to economic growth, the International Monetary Fund declared Tuesday.
In its latest assessment of the global economy, the IMF predicted that worldwide inflation will cool from 6.7% last year to 5.8% this year and to 4.3% in 2025. It estimates that inflation will fall even faster in the world’s wealthy countries, from 4.6% last year to 2.6% this year and 2% — the target range for most major central banks — in 2025.
The slowdown in inflation, after years of crushing price increases in the aftermath of the pandemic, led the Federal Reserve and the European Central Bank to cut interest rates this year after they had aggressively raised them to try to tame inflation.
“The battle against inflation is almost won,″ Pierre-Olivier Gourinchas, the IMF's chief economist, told reporters Tuesday. ”In most countries, inflation is hovering close to central bank targets.″
Inflation had accelerated when the world economy recovered with unexpected speed from the COVID-19 recession, leaving factories, freight yards, ports and businesses overwhelmed with customer orders and creating shortages, delays and higher prices. The high borrowing rates engineered by major central banks, along with the end of supply chain logjams, brought inflation dramatically down from the four-decade highs it hit in mid-2022.
And to the surprise of forecasters, the economy — especially the largest, in the United States — continued to grow and employers kept hiring despite higher borrowing costs.
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