Georgieva, IMF: If Mother Nature doesn’t cooperate, winter will too

“Inflation is stubborn, it’s more widespread than we think… That means we need central bank governors to be as stubborn in fighting it as inflation has proven to be,” Georgieva said.

But if fiscal policy is not sufficiently well targeted, it could become “the enemy of monetary policy, fueling inflation”, warned Georgieva.

Referring to the situation in Europe, the director of the IMF appreciated that, in the current situation, the European Central Bank must achieve a careful balance between the fight against inflation and the need to keep the economy functioning.

“There is definitely a fear of a recession in some countries, or even if it’s not going to be a recession, it’s going to feel like a recession in the winter. And if Mother Nature will not cooperate, and the winter will be a harsh one, this could lead to social tensions”, said Kristalina Georgieva.

In August, the inflation rate in the euro area reached a new record of 9.1%. In this context, ECB experts revised their inflation projections significantly upwards, anticipating that it will be, on average, at 8.1% in 2022, at 5.5% in 2023 and at 2.3% in 2024.

Comparatively, in June of this year, the institution from Frankfurt forecast inflation of 6.8% in 2022 and 3.5% in 2023.