- IMF Managing Director Kristalina Georgieva told CNBC: “We are not yet seeing a significant slowdown in lending.”
- Stressing that the global economy is in an “exceptionally uncertain environment”, Georgieva said: “Pay attention to trends and be agile, adapt if trends change”.
- The majority of the world’s major central banks, including the US Federal Reserve, have tightened monetary policy aggressively to control soaring inflation.
Georgieva says she had to work “twice as hard” to be equal to her male colleagues.
Drew Angerer/Staff/Getty Images
The International Monetary Fund has yet to see enough banks pull their loans for the US Federal Reserve to change course with its rate hike cycle.
“We don’t see a significant slowdown in lending yet. There is, but not on the scale that would lead to a Fed pullback,” IMF Managing Director Kristalina Georgieva told CNBC’s Karen Tso on Saturday. in Dubrovnik, Croatia.
The Federal Reserve, in a report on banks in May, warned that lenders were worried about conditions ahead as problems at midsize financial institutions in the United States prompted banks to tighten lending standards to households and businesses.
Fed loan officers added that they expect the problems to continue over the next year due to lower growth forecasts and concerns about deposit outflows and reduced tolerance for the risk.
Georgieva told CNBC: “I can’t stress enough that we are in an exceptionally uncertain environment. Therefore, pay attention to trends and be nimble, adapt. — if the trends change.”
The IMF’s comment on the pace of a slowdown in global lending comes after its chief economist Pierre-Olivier Gourinchas told CNBC in April that banks were now in a “more precarious position” that would pose a risk to investors. The international organization’s global growth forecast of 2.8% for this year.
The majority of the world’s major central banks, including the US Federal Reserve, have tightened monetary policy aggressively to control soaring inflation. Meanwhile, global global debt has swelled to a near-record high of $305 trillion, according to the Institute of International Finance. The IIF said in its May report that debt levels and high interest rates have raised new concerns about leverage in the financial system.
While the IMF has yet to see a significant slowdown in lending that would prompt the Fed to reverse course, Georgieva said that, combined with a resilient US jobs report on Friday, it could rise further.
“The pressure that comes from rising incomes and the still very, very low unemployment rate means the Fed will have to stay the course and maybe in our view it may have to do a little bit more,” he said. she declared.
She forecast the US unemployment rate to top 4%, up to 4.5%, thanks to further rate hikes by the Fed after the rate hit 3.7% in May, marking the highest since October. 2022.
On the US government’s vote on a debt ceiling bill signed by President Joe Biden this weekend, she said: “what was agreed upon, in the context (where) it has been agreed, is overall a good result”.
“The problem is that the repetitive debate around the debt ceiling, in our opinion, is not very useful. There is room to rethink how to go about it,” he said. -she adds.
– CNBC’s Jeff Cox, Elliot Smith contributed to this report