Economic situation: IMF expects energy prices to remain high

According to the head of the International Monetary Fund (IMF), the high energy prices resulting from the Iran war will remain for some time. “Price pressure could increase further as demand increases with the start of the cold season in the northern hemisphere and countries replenish their reserves,” warned Kristalina Georgieva in a speech in Singapore ahead of the annual meetings of the IMF and the World Bank, according to the manuscript. Even if the conflict ends soon, prices are likely to remain high until 2027, Georgieva said. The conference begins next week in Bangkok.

The challenging situation with energy prices and the boom in artificial intelligence are driving up prices, the IMF warned. Tariffs, defense spending and high national debt could also increase inflation. “A cautiously more restrictive approach to monetary policy could now be appropriate in many countries,” said Georgieva. She praised the US Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of Japan for having already raised their key interest rates.

At the same time, Georgieva criticized the current financial policies of some industrialized countries. Higher key interest rates caused short-term interest rates to rise and thus made debt more expensive. Despite escalating national debt around the world, she sees “no decisive measures in the highly indebted industrialized countries, although credible medium-term budget consolidation plans are urgently needed.”