New York: The International Monetary Fund (IMF) expects the U.S. economy to experience high inflation for at least another year or two. “I would be careful about looking at one data point for the U.S.,” IMF First Deputy Managing Director Gita Gopinath cautioned.
The first deputy managing director of the International Monetary Fund (IMF), Gita Gopinath, discussed global inflation and the U.S. economy in an interview with Bloomberg Friday in Jackson Hole, Wyoming.
Responding to a question about whether global inflation has peaked, she said: “I think it’s too early to say. Yes, we have inflation almost everywhere. There are important exceptions, like China and Japan, but everywhere else we have high levels of inflation.” The IMF executive added:
There are global factors like energy prices and food prices that are driving it but there are also kind of more sticky components of inflation that are high.
On Friday, Federal Reserve Chairman Jerome Powell stressed in his annual Jackson Hole speech that the central bank will use its tools “forcefully” to attack inflation, which is still running near its highest level in more than 40 years. He expects the Fed to continue raising interest rates in a way that will cause some pain to the U.S. economy.
Commenting on Powell’s speech, Gopinath opined: “What was great was that he came out as being firm and resolute about bringing inflation down to target, making sure inflation expectations don’t get de-anchored and that, I think, is exactly what you need to make sure that the economic health of the world is in a good place over the medium to long term.”
“I think last year around the same time, there was a good inflation reading and everybody thought we were on track for inflation to come down. And then October inflation went up again. So I think one needs to be very wary about one inflation rating,” the IMF’s first deputy managing director pointed out.
“We are in a period where inflation is likely to be high for a while, at least for another year or two,” she added.