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25 Jun, 2022 05:44

US must endure ‘pain’ to fix inflation – IMF

The global lender says the US may have to suffer a recession in order to tame rising prices
US must endure ‘pain’ to fix inflation – IMF

The United States may have to endure economic “pain” in order to rein in rampant inflation, the head of the International Monetary Fund (IMF) said on Friday, noting that a downturn might be the “necessary price to pay” for recovery. 

Speaking to reporters during a Friday press conference, IMF Managing Director Kristalina Georgieva predicted a rough ride for the US economy, which is experiencing decades-high inflation with soaring prices for a number of staple goods. 

“Success over time [in lowering prices] will be beneficial for global growth, but some pain to get to that success can be a necessary price to pay,” she said, soon after the IMF slashed its growth forecast for the US by nearly a full percentage point, down to 2.9%.

Georgieva added that the United States faces a “narrowing path to avoiding a recession,” but that tackling inflation must be the “top priority,” even if it means an economic slow-down.

Nigel Chalk, the number two official at the IMF's Western Hemisphere branch, also warned of the risk of a recession, but predicted that any downturn would be short-lived, pointing to robust savings and labor markets in the country.

The comments from the international lender come after the US Federal Reserve pushed through the highest interest rate hike in 28 years last week, in what Fed chair Jerome Powell described as an effort to counteract inflation. He has since acknowledged, however, that the central bank does not have control over prices for many key goods, including food and gas, explaining “There’s really not anything that we can do” about rising oil and grain costs.