Global Interest Rate Hikes Have 'Yet To Bite': IMF Chief

The world economy is still in a sticky spot, according to the head of the International Monetary Fund (IMF), despite cautious optimism among economists and business leaders that slowing inflation means the worst of last year’s crises may be over, Anna Cooban reported for CNN.

Photo Insert: Addressing a panel at the World Economic Forum (WEF) in Davos, Switzerland, Georgieva said interest rate hikes by the world’s major economies had “yet to bite.”

Kristalina Georgieva, managing director of the IMF, said on Friday that conditions in the world economy were “less bad” than feared a few months ago, but further pain could be on the way.

Addressing a panel at the World Economic Forum (WEF) in Davos, Switzerland, Georgieva said interest rate hikes by the world’s major economies had “yet to bite,” and could increase unemployment — a situation that cash-strapped governments could find hard to respond to adequately.

“It is very different for a consumer to have [a] cost-of-living crisis and a job, than to have [a] cost-of-living crisis and no job,” she said.

Last year, most of the world’s central banks, including the US Federal Reserve and European Central Bank (ECB), started aggressively hiking interest rates in an attempt to control runaway inflation triggered, in large part, by Russia’s invasion of Ukraine that sent energy prices soaring.

ECB President Christine Lagarde vowed, during Friday’s discussion, to “stay the course” in bumping up the cost of borrowing to bring inflation down to the central bank’s 2% target.

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