Global interest rates will likely continue to rise until 2023 when hot rates will begin to cool in response to central banks' actions, according to Kristalina Georgieva, managing director of the International Monetary Fund.
Commodity prices, such as oil, may have stabilized and started to fall in recent months, but Georgieva said she will do so in response to recession risks and not necessarily because inflation has been tamed.
Commodity prices, such as oil, may have stabilized and started to fall in recent months, but Georgieva said she will do so in response to recession risks and not necessarily because inflation has been tamed.
“Right now, we are still seeing inflation going up; we have to throw some cold water on it.”
The disruptions caused by the pandemic in supply chains have led to bottlenecks while the war in Ukraine has exacerbated these shocks. The result has been rising prices for commodities including basic foodstuffs such as food, fertilizer and energy.
While food inflation had already started before the pandemic and the war, the two events only added to the problem. Global food prices reached an all-time high between March and April this year, according to the World Bank.
The World Bank's March-April Food Price Index has increased by 15% over the past two months and was 80% higher than it was two years ago.
Oil prices have stabilized and started to slide, dropping from $120 a barrel in early June to less than $100 a barrel this week.
However, US consumer inflation hit a 40-year high of 9.1% last month, a situation Treasury Secretary Janet Yellen described at the G20 as "unacceptably high".
She added that it was important to control inflation, or else incomes would be eroded, hitting the hardest in the world's poorest regions.
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