People around the world will be “in the streets” if steps are not taken to protect the most vulnerable from inflation, the IMF chief warned on Wednesday.
“It is important to note that this combined impact of multiple crises is already testing people’s patience and resilience. If steps are not taken to support the most vulnerable, there will be consequences,” Kristalina Georgieva told CNN’s Christian Amanpour.
“If we don’t reduce inflation, it will hurt the most vulnerable, because exploding food and energy prices are seen as an inconvenience for the wealthy, but for the poor it is a tragedy. So we think of the poor first when we support the aggressive attack on inflation,” added the head of the International Monetary Fund.
IMF chief: Raising interest rates is the only option to fight inflation
He also stressed that central banks around the world have no choice but to raise interest rates in an effort to combat inflation.
“Fiscal policy, if it’s generous enough to help everyone, will actually get in the way of monetary policy, it will become the enemy of monetary policy, because when demand goes up, prices go up again, and then there must be a greater adjustment”. “said the IMF chief, adding: “The critical question before us is to restore the conditions for growth. And price stability is a critical condition.”
Georgieva: This year is difficult, next year will be even more difficult
According to her, the events that led to the price increases, mainly the Omicron variant of Covid-19 and Russia’s invasion of Ukraine, have made inflation our biggest enemy today.
“This year is difficult, next year even more difficult. Why; Because of the response crises. In just three years we have the pandemic (which is not over yet), the war and the increase in energy prices and food after the Russian invasion. The result is a cost of living crisis,” Georgieva told CNN.
Then, when asked about rising support for far-right candidates, as is happening in Italy and Sweden, the IMF chief said she is “not surprised to see people angry. They are locked in their houses for months. They see prices go up dramatically. And that is why my call to legislators is to be careful.”
“There will be people on the street. If we are not able to protect the feeling of survival and the feeling of solidarity, this will happen,” Georgieva concluded.
source: iefi merida