IMF predicts interest rates decline to pre-Covid levels

The International Monetary Fund (IMF) has suggested on Monday that advanced economies’ central banks are likely to bring interest rates back towards pre-coronavirus levels to near zero, as well as ease monetary policy.

This means that after the most synchronised monetary policy tightening in decades, interest rates will begin to drop and approach “zero lower bound” levels in advanced economies while developing economies also see a steady decline, IMF added.

Global growth is expected to be below 3 percent in 2023 and remain around that level for the next five years, which is a weak forecast, said IMF’s managing director Kristalina Georgieva.

IMF added that developing countries will gradually cut interest rates, adding that major central banks are fighting inflation but will likely move to facilitate monetary policy.

The Fund said that current high interest rates were provisional, and a number of economists felt that forces such as globalisation had helped to keep borrowing costs down and led government debt to historic levels.