IMF estimates that central banks will lower interest rates in the coming months

He International Monetary Fund (IMF) estimated this Tuesday that the main central banks world will begin to lower interest rates in the coming months, expectedly in the second half of this year.

“What we are seeing is that central banks will delay easing until the second half of 2024. And that is when we anticipate that the Federal Reserve, the European Central Bank, the Bank of England and others could start to ease”noted the IMF chief economist, Pierre-Olivier Gourinchas, in a press conference.

Today the Fund published its latest economic outlook report (WEO) in which it raised its global growth forecasts for 2024 by two tenths, to 3.1%.

The Washington-based institution therefore draws a less gloomy outlook than the one presented in October, although it warns that there are risks that could reduce this growth, such as crisis in the Red Sea arising from the Gaza war, which could cause supply disruptions and drive up prices.

Even so, these risks have not yet materialized and the expectation is that inflation will drop from 6.8% in 2023 to 5.8% in 2024 and 4.4% in 2025 (two tenths less than estimated in October).

Advanced economies are expected to experience faster disinflation and that in 2024 it will reach 2.6% (four tenths less) and 2% in 2025 (two tenths less), the target figure that central banks such as the Federal Reserve US (Fed).

“What we are saying is that we are almost there, but we are not there yet”Gourinchas said about the Fund’s advice to lower interest rates.

Thus, there are a series of indicators that point to disinflation “relatively fast” if energy prices are analyzed, for example, but there are also other indicators “that point to greater persistence”like the prices of services, for example, explained the economist.

“Also, if you look at some countries, wage growth is still quite strong and, if that in turn leads to price growth in the future, that is a risk that central banks need to look at carefully.”said.

Last day the 25th European Central Bank (ECB) met expectations and decided to keep interest rates at 4.5% for the third consecutive time, while warning that it is still premature to discuss possible reductions.

And this Tuesday the two-day meeting of the Federal Reserve (FED) begins in the United States, after which it will announce its decision. According to economists, the US central bank will also opt to maintain rates, although the signals it gives about possible future cuts will be key.