IMF wags its finger at central banks – but are they listening?
theguardian.comInternational agencies saw their influence wane after the 2008 financial crash as the support for multilateral agreements gave way to quick-fix solutions between governments. The International Monetary Fund and the World Bank, which hold their joint spring meetings next week, have suffered like many others.
So when the IMF boss, Kristalina Georgieva, wags a finger at the major central banks – the US Federal Reserve, the European Central Bank, the People’s Bank of China, the Bank of Japan and the Bank of England – the question is: are any of them listening?
After a flirtation with austerity in 2009 and 2010, IMF officials largely rejected cuts in government spending as a route to growth but it was a message that went unheeded in most major capitals. The Washington-based organisation has produced reams of literature arguing that inequality is bad economics and that climate change is an emergency, only to be met by loud applause and little in the way of action.
Georgieva said on Thursday in a scene-setting speech that inflation “is a threat to financial stability and a tax on ordinary people struggling to make ends meet”. She subscribes to the orthodox view that central banks should take “decisive action”, which is a euphemism for jacking up interest rates.
She also warned them to be careful about the spillover effects and urged governments to mitigate the impact on those nations that have to borrow to survive. While developed countries are suffering from spiralling inflation and higher interest rates, the biggest threat is to emerging and developing economies that not only face “the added risk of higher borrowing costs but also the risk of capital outflows”.
But is anyone taking notice? Zambia, Chad, Ethiopia and Sri Lanka head
Read more on theguardian.com
