IMF deputy managing director urges central banks to “act cautiously”

The deputy managing director of International Monetary Fund (IMF)Gita Gopinath, has urged central banks to “act with caution” and has estimated that, with the information currently available, the rate cuts would occur in the second half, not the first.

The central banks “They must act with caution. “Once rates are cut, expectations of further cuts solidify and could end up with much further easing, which can be counterproductive,” He pointed out in an interview with the Financial Times during the Davos Forum (Switzerland).

“Based on the data we have seen, we would expect the rate cuts to occur in the second half, not the first,” has added.

In the interview he also pointed out that it is expected that this year the inflation falls less sharply than last year and has stressed that “The work is not finished.”

In an interview during his participation in Davosthe president of the European Central Bank (ECB), Christine Lagarde, assured this Wednesday that it is likely that the monetary institution she directs will reach a consensus to lower interest rates in the summer, which cooled market expectations that it would be sooner.

European stock markets reacted with falls, also weighed down by the United Kingdom’s inflation data, which stood at 4% in December, compared to 3.9% in November, its first rise since February 2023.