Iran war ends? IMF boss says the energy price pain may not

Bangkok, October 7 - The International Monetary Fund's (IMF) Managing Director, Kristalina Georgieva, cautioned that high energy prices stemming from the Iran war could endure for an extended period, according to a German news agency report. Georgieva highlighted that price pressures may intensify as demand increases with the onset of the Northern hemisphere's cold season and countries replenish their reserves.

Even if the conflict concludes swiftly, high energy prices are expected to linger, she asserted, citing that oil futures now forecast elevated oil prices through 2027. During the upcoming annual meetings of the IMF and World Bank, set to commence next week in Bangkok, Georgieva emphasized that the challenging energy market scenario and the surge in artificial intelligence are contributing to price pressures.

She also cautioned that tariffs, defense spending, and high public debt levels could further fuel inflation. Georgieva suggested that the current moment may warrant a judiciously hawkish approach in the monetary policies of numerous countries. She commended the US Federal Reserve, the European Central Bank, and the Bank of Japan for raising their key interest rates, while simultaneously criticizing the fiscal policies implemented by some advanced economies.

Georgieva pointed out that soaring public debt worldwide has not prompted decisive action from high-debt advanced economies, calling for urgent and robust medium-term fiscal consolidation plans.