'Hmmm, maybe the prediction of next year's recession really came true.'
In an effort to control and subsequently bring inflation to a 'neutral' level, the world's central banks need to continue tightening monetary policy immediately.
The basis was stated by the head of the International Monetary Fund (IMF), Kristaline Georgieva ahead of the implementation of monetary policy tightening by the European Central Bank (ECB) tonight.
He commented that the ECB is expected to raise interest rates by 75 basis points and based on that, the central bank will move more aggressively before things become more neutral by 2024.
It is well known that the ECB was previously one of the central banks that did not tighten policy even though the inflation rate in Europe was rising.
However, following an extreme spike in inflation around 9.9% in September, the ECB has taken action to make its first interest rate hike to cover the effects of the war in Ukraine.
It is an action that needs to be taken since inflation is so high that it suppresses growth and causes the poor to live in extreme hardship.
In the meantime, Georgieva also expressed her projection of policy tightening by other central banks including the Federal Reserve (Fed) in the United States (US).
He explained that if the central banks continue to increase rates aggressively then there is hope that the effects will be felt by 2024 and the world community will have to be patient in facing it.
