International Monetary Fund (IMF) Spokesperson Julie Kozack announced that they expect inflation in the USA to decline to the 2 percent target by the middle of 2028.
Evaluating the developments in the global economy at the press conference he held, Kozack stated that headline inflation in the USA continues to be above the 2 percent target. Kozack said this outlook was partly due to the commodity price shock caused by the war in the Middle East and partly due to the fact that inflation remained high in the services sector.
Stating that the return of inflation to the target in the USA will be delayed, Kozack said, "According to our current estimates, we foresee inflation to decrease to the 2 percent target in the middle of 2028."
Kozack stated that they do not think that the recent inflationary pressures are due to increasing labor costs and that they consider that other factors play a role in inflation remaining above the target.
In June, the IMF announced that it expected US inflation to return to target by mid-2027.
Stating that they found it appropriate for the US Federal Reserve (Fed) to start tightening monetary policy, Kozack said, "Our view is that a restrictive policy stance will be necessary in the coming period in order to support the disinflation process and gradually bring inflation back to the target. We fully support the Fed's focus on price stability and its readiness to take action when necessary to reduce inflation."
"A possible change in artificial intelligence investments will also affect inflation"
Kozack also answered a question about the possible effects of artificial intelligence and changes in investments in this field on inflation.
Stating that the shock in energy prices and the rapid increase in artificial intelligence investments are two important factors shaping the global economy, Kozack said that these have opposite effects on growth, but both create inflationary pressure.
"Therefore, any re-evaluation of the explosion in artificial intelligence investments or a possible change in this area will also affect inflation," Kozack said.
Kozack stated that it is too early to say how the rapid increase in artificial intelligence and broader technology investments will follow in the future.
Stating that the IMF focuses on the risks that artificial intelligence may pose in terms of financial stability, Kozack said, "In addition to cyber risks, we also evaluate other financial stability risks that may arise from market movements and similar developments. This is our main focus area."
Kozack said that more comprehensive security measures for leading artificial intelligence models and decisions about whether these models will be regulated fall outside the IMF's authority and responsibility.
"Potential risks are on the agenda"
Kozack reminded that artificial intelligence was one of the main agenda items at the IMF-World Bank Annual Meetings held in Bangkok and there was great interest in this field.
Stating that the rapid increase in artificial intelligence investments supported growth at a time when the energy shock slowed global growth, Kozack said that the meetings discussed how artificial intelligence could contribute to productivity in the future and how it could affect labor markets. Kozack noted that possible risks associated with artificial intelligence were also brought to the agenda.
Kozack made the following assessment regarding the volatility associated with artificial intelligence in the stock markets recently:
"We see that valuations remain generally elevated in some markets. As we noted in the Global Financial Stability Report and discussed at our annual meetings, these valuations remain open to the risk of reassessment of expectations for the long-term profitability of AI and AI investments. Therefore, our overall view remains valid. We continue to closely monitor AI valuations and other areas where AI may pose particular risks to financial stability."
Kozack stated that the IMF is closely monitoring the latest developments and their effects on stock markets, the economy and financial stability.
