Central Bank Hawks Had Better Hope the IMF Is Wrong About Rates
If policymakers are bounced into reversing recent rate increases, their already battered credibility will suffer.
The logo of the International Monetary Fund.
Photographer: Andrew Harrer/Bloomberg
The International Monetary Fund has caused some consternation with the long-range forecasts in its April World Economic Outlook. It predicts that once the current bout of nasty global inflation abates, interest rates will return close to zero. If the IMF is on the money with this big-picture call, it will shred whatever is left of central bankers' credibility.
The IMF reckons most economies will subside into anemic growth, in turn curbing prices. If this really is to be our fate, then the last three years of plunging, then soaring, borrowing costs will have been a round trip of angst leaving us back where we were — with gross domestic product floundering.