“If we don’t bring inflation down, it will hurt the most vulnerable, because an explosion of food and energy prices for those who are better off is an inconvenience – for the poor people, tragedy. So we think of the poor first people when we advocate for vigorously attacking inflation,” said Georgieva.
Central banks around the world have “no choice” but to raise interest rates in an effort to fight inflation, she added.
“Fiscal policy, if it’s going to be generous to help everyone, monetary policy will actually get in the way, it would be the enemy of monetary policy, because you increase demand and that pushes prices back up, and then there should be more tightening”, said the IMF chief. “The critical question for us is to restore conditions for growth, and price stability is a critical condition,” she added.
Events that have driven price increases – notably the Omicron variant of Covid-19 and Russia’s invasion of Ukraine – have “made inflation our biggest enemy today,” the IMF chief told Amanpour.
“This year is hard, next year will be harder. Why? Because of shock after shock after shock. In just three short years: the pandemic (not over yet), the war, the invasion of Russia which raised energy and food prices pressure, and then the result is a cost-of-living crisis,” she told CNN.
When asked about a rise in support for far-right candidates in the likes of Italy and Sweden, Georgieva said she is “not surprised to see people getting angry. They have been locked in their homes for months , and months and months. see prices jump up dramatically. And this is why my call to policy makers is ‘be careful’.”
“If we cannot protect the sense of survival and the sense of solidarity, this is what will happen,” she warned. There will be “people on the streets” worldwide unless steps are taken to protect the most vulnerable from inflation.
The IMF chief told Amanpour that events that have driven price increases – particularly the Omicron variant of Covid-19 and Russia’s invasion of Ukraine – have “made inflation our biggest enemy today.”
“If we cannot protect the sense of survival and the sense of solidarity, this is what will happen,” she warned.