IMF expects a decrease in interest rates – Breaking economy news
[ad_1]
The International Monetary Fund (IMF) announced that the increase in interest rates is temporary and that once inflation is under control, interest rates may fall back to pre-epidemic levels.
In its latest Global Economic Outlook Report, the International Monetary Fund (IMF) noted that tightening monetary policies in response to high inflation are likely to ease and interest rates to return to pre-pandemic levels.
It was stated that how much interest rates will approach these levels depends on whether alternative scenarios involving constantly increasing budget deficit and debts or financial fragmentation will occur.
in the report World It was said that the ratio of public debt to gross domestic product increased and will remain high during the Covid 19 pandemic. In the third part of the report, it was stated that low interest rates will facilitate the fight against public debt.
HOW TO COMBAT INCREASING PUBLIC DEBT?
In the report published by the IMF, “How to fight the increasing public debt?” In the section titled, three main conclusions are reached by reviewing historical experiences based on econometric analysis.
These results are listed as follows:
Timed and properly designed fiscal adjustments are likely to permanently lower debt ratios.
– When a country is in debt distress, renegotiating existing terms of payment, policies to support fiscal consolidation and economic growth can have a significant and long-lasting effect in lowering debt ratios. Coordination between creditors is essential.
Finally, economic growth and inflation have historically contributed to lower debt ratios.
Persistent inflationary pressures pose the risk of a “prolonged high” interest rate environment, the IMF said in the report. However, over a longer period of time and after inflationary pressures have subsided, equilibrium real interest rates are expected to remain low due to structural forces that should help keep real debt service costs in check.
[ad_2]
Source link