International Monetary: High interest rates in the United States do not encourage investment in emerging economies

United States – International Monetary Fund Director General Kristalina Georgieva said that high interest rates in the United States make investing in emerging economies risky.

Georgieva explained during her speech at a special session of the World Economic Forum in Riyadh that, “First, high interest rates have a negative impact on growth prospects around the world. Second, higher interest rates in the United States mean that money is going there,” she asked. “Why take risks in emerging markets when you can invest in US Treasuries.”

She added, “High interest rates also mean a strong dollar, and when the dollar is strong, for many currencies this leads to a decline in their value, which makes it difficult to combat inflation within the country.”

The Director of the International Monetary Fund stressed that in order for the global economy to recover, countries need to shift to a more flexible monetary policy.

Georgieva also noted that inflation in the United States will fall to the target by 2025, but the International Monetary Fund fears that interest rates will not return to pre-pandemic levels.

The US Federal Reserve System, which acts as the central bank, kept its key interest rate at 5.25%-5.5% following its meeting in March.

Inflation in the United States has slowed significantly since June 2022, when it reached a 40-year high of 9.1%.

Source: TASS