In an interview with CNBC, International Monetary Fund (IMF) Managing Director Kristalina Georgieva highlighted the uncertainty surrounding the global economy, stating that markets should accept this situation as a “new normal.”
Georgieva also said the Fed may need to cut interest rates further as part of its balance between fighting inflation and supporting growth.
Assessing the global economic outlook ahead of the IMF's 2025 annual meetings, Georgieva shared her expectations for the Fed's upcoming steps. The fund announced that it expects further interest rate cuts from the Fed, anticipating that efforts to control inflation will be rewarded.
Georgieva argued that the Fed is currently managing a delicate balance between “ensuring growth remains strong and keeping inflation under control.”
Georgieva stated that there are two main factors that led to the pause in inflation, stating that these are the stabilization of services inflation at around 1% above its pre‑COVID level and the prevention of the transition of inflation as companies absorb most of the tariff effects thanks to their large profit margins.
Georgieva stated that there is an “insatiable appetite” for gold among central banks and investors, and that gold's new record high is a “worrying sign.” The IMF chief stated that the main reason behind this move is the “cloud of uncertainty,” noting that this cloud “will not disappear anytime soon.” She added that amidst this uncertainty, central banks and private sector companies are turning to gold as a “buffer” against uncertainty.
*This is not investment advice.