Don't rush to join the Fed kingpin: IMF chief Georgieva at the central banks

Central banks around the world should not rush to ease their fight against inflation, even as the Federal Reserve signals its own policy shift next year, the head of the International Monetary Fund (IMF) said on Friday.

“Sometimes countries declare victory prematurely and then inflation becomes more deeply entrenched and the battle becomes tougher,” IMF Managing Director Kristalina Georgieva told reporters in Seoul. “Don't say hop before you jump.”

The IMF chief joins European Central Bank President Christine Lagarde and Bank of England Governor Andrew Bailey in being cautious after the Fed shook markets on Wednesday by signaling that its policymakers are turning their attention focus on reducing financing costs by 2024.

She indicated that her advice applied to the Bank of Korea's case after meeting Governor Rhee Chang-yong.

Georgieva said the Fed was right to identify its pivot point based on US data, but other central banks should consider their own situations. “With inflation declining and slowing, but at different points in different countries, central banks need to tailor their own actions to domestic conditions,” she said.

Still, the fight against inflation is in its “very last mile,” she said, advising the BOK not to move faster on its own policy stance than the data allows.

Georgieva visited Seoul this week for a joint conference with the BOK on digital money.

First print: December 16, 2023 | 12:19 pm IST