World must ‘buckle up’ for higher interest rates, warns IMF boss

The war between Hamas terrorists and Israel has had a “visible” economic impact, according to the head of the International Monetary Fund, as she warned the era of low interest rates was over. 

“Unquestionably we are in a more shock-prone world. And that requires countries to adapt to that world rather than pretend that it does not exist,” Kristalina Georgieva told the Future Investment Initiative in Riyadh. 

She said that while inflation was now slowly coming down “it is not going down fast enough”, adding: “So now … our call to everybody is: buckle up. Make sure that you understand interest rates are here to stay for longer.” 

Describing the conflict in the Middle East as “tragic”, Ms Georgieva warned that further global tensions would hurt an already fragile global recovery from the pandemic. 

She said: “[In the] uncertain world we live in, growth is slow, and will remain slow for years to come. Inflation is still high and that requires interest rates to remain high, throwing more cold water on growth. 

“Who in their right mind would then further negatively impact our prospects for growth by fragmenting the world economy? So please! Come to your senses, all of us! 

“We have a very tragic moment by the people affected by the war that erupted. It is devastating for the families that have suffered losses. terrible for the economic prospects for the epicentre of the war [and will have a] negative impact on neighbours through trade channels, tourism channels, cost of insurance and a more jittery world [with] more anxiety in the world.”

Read the latest updates below.