GENEVA (Reuters) – Central banks do not have the space to keep monetary policy loose and interest rates low, the International Monetary Fund’s chief economist said on Thursday.
Gita Gopinath, IMF chief economist, told a World Health Organization (WHO event) on funding for vaccines and other tools against the COVID-19 pandemic:
“We are now in the phase where countries around the world just don’t have the space to keep monetary policy very loose, to kind of keep interest rates extremely low. We are seeing inflationary pressures building up around the world,” she said.
“And so think of a situation where you could have this pandemic last longer, you have longer supply disruptions that are putting inflationary pressures, and then we have the real risk of something we have avoided so far, which is stagflationary concerns,” Gopinath added.
(Reporting by Stephanie Nebehay; editing by Brenna Hughes Neghaiwi)
