IMF’s Georgieva ‘very confident’ on soft landing, sees rate cuts coming

LONDON (Reuters) -The International Monetary Fund is now “very confident” the global economy will see a soft landing, its managing director Kristalina Georgieva said on Monday, adding that interest rates would start coming down around mid year.

“We are very confident that the world economy is now poised for this soft landing we have been dreaming for,” after some of the sharpest interest rate hikes in decades, Georgieva said at the World Governments Summit in Dubai.

On the prospect of interest rates being cut in leading economies like the United States, she added: “I expect to see by mid year interest rates going in the direction inflation has been going on for the last year.”

She cautioned to expect the unexpected in the wake of the COVID-19 pandemic and said a prolonged war between Israel and Hamas would impact global economies.

“I fear most a longevity of the conflict because (if) it goes on and on the risk of spillovers go up,” the IMF chief said.

“Right now we see a risk of spillover from the Suez Canal,” she said referring to recent attacks on ships in the Red Sea. “But if there are other unintended consequences in terms of where the fighting goes, then it can become much more problematic for the world as a whole.”